Originally Posted by justin
Instead of increasing core CPI, the increased energy costs could be absorbed by businesses, resulting in lower profit margins.* I don't think this will happen forever, as eventually businesses' prices will increase to reflect their true operating costs.*
Yup, that's exactly what's been happening for the last year or two, both domestically and internationally.* *The economy is weak enough that manufacturers don't think they have a lot of pricing power, but they are finally starting to cave in under margin pressure.* * Remember that press release that Toyota issued a while back?* *Something like "To give GM a break, we're going to raise our prices."* *It's hard to spin a price increase.*
* *That's also partly why we just saw such large import inflation -- those guys are under forex pressure and energy price pressure.* *The core is slowly heating up.