The government says inflation is cooling. So why are big companies still raising prices?

Photo (c) Lazy Bear - Getty Images

So far, consumers appear to be paying up

In its March Consumer Price Index report, the Labor Department found inflation was continuing to fall. The year-over-year inflation rate was 5%, still high but down significantly from its 9% peak in June.

In recent weeks, as publicly traded corporations have reported their first-quarter earnings, some major brands told investors they were able to raise prices and not see much pushback from their customers.

For example, consumer products giant Procter & Gamble said it raised prices across its entire portfolio of products by 10%. It said consumers more or less accepted the price hikes as sales volumes fell by only 3%.

Consumers paid higher prices for everything from Pampers diapers to Pantene shampoo. The company said sales of Tide detergent went up, even though the product cost more.

A more expensive Coke

It was the same story for Coca-Cola, which this week reported sales and earnings that beat forecasts. During the quarter Coke continued to raise prices of its products to offset the effects of inflation.

But the impact of higher prices on company earnings was small. Coke’s unit case volume actually grew 3% in the quarter, even though sales in North America were flat.

McDonald’s is another major brand that has aggressively hiked prices. Even though company officials told investors that they were seeing some pushback from customers, that wasn’t reflected in the company’s finances. 

Higher prices aren’t keeping people out of McDonald’s

McDonald’s first-quarter earnings and revenue were higher than expected. Store traffic was up for the third straight quarter while some competitors experienced a dip in business.

In response to The Sun newspaper’s report on price increases in the UK, a McDonald’s spokesman said inflation continues to affect the company and its suppliers.

"We carefully review and adjust our prices to ensure that while some prices may change, we maintain great value and quality across our menu," the spokesman said.

In the U.S., McDonald’s has taken some social media heat for its prices. A TikTok video that went viral shows the menu board at a McDonald’s in Connecticut where the price of a Big Mac Combo Meal was $16.89. 

Lisa, of Cocoa, Fla., has also noticed higher prices at McDonald’s.

“My chicken sandwich looked like 2 chicken nuggets thrown on a bun with a pickle nothing else for twice as much as what we use to pay,” Lisa wrote in a ConsumerAffairs review. Disgusting!

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