Costs squeeze household goods like Charmin
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Jeremy Hobson: In Florida today executives with America’s biggest household products companies, are wrapping up a meeting with stock analysts. Companies like Proctor and Gamble and Clorox are trying to clean up their acts for investors. But that task is gonna require a little elbow grease because of rising costs for the stuff that goes into their products.
Our New York bureau chief Heidi Moore reports.
Heidi Moore: After the housing crisis, we may have a house-cleaning crisis. Companies that make detergent and toothpaste are paying more for petroleum and other commodities. Procter & Gamble, for one, says its costs will jump by $1 billion this year.
The good news is, Procter & Gamble won’t be passing on all of that to consumers.
Lauren DeSanto: I think you’re going to see modestly higher prices on household products.
That’s Lauren DeSanto, who covers Procter & Gamble for Morningstar. She spoke to us from the conference where analysts are fretting about the future of consumer companies. She says they can’t raise prices too much for strapped shoppers because they will balk at $4 toothpaste. So Procter & Gamble will just have to make less money.
DeSanto: It’s going to be a huge hit on their bottom line.
That will disappoint shareholders. But in the toughest position of all are retailers like Wal-Mart, who guarantee low prices to shoppers. That’s a hard promise to keep these days.
In New York, I’m Heidi Moore for Marketplace.
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