U.S. Buyers Say No To Price Increases - Except for Appliances Apr 5, 2006

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In the U.S. pressure to increase prices is growing among many manufacturers as higher costs for energy, resins and other commodities percolate through the economy, according to the latest Quarterly Market Basket issued today by The Ernst & Young LLP Consumer Trends Center

"Companies that manufacture commodity-type products are less likely to be able to push through price increases because of the competition from private label," said Americas Director of Consumer Products Jay McIntosh. "Consumers have the final say at the cash register and many are turning to private label to help them lower expenses for food, clothing and household supplies."

Home appliances are bucking the trend, with many consumers showing willingness to spend for upscale appliances, especially when they remodel their kitchens. New-generation energy saving appliances is also encouraging sales, Ernst & Young found.

Year-over-year inflation was minimal for the household furnishings segment (up 0.6 percent) in general. According to the report, anti-deflation strategies among manufacturers include more upscale and/or energy efficient options in the household furnishings segment.

The Ernst & Young Quarterly Market Basket is based on components of the Consumer Price Index and compares prices in a 5-year period, cutting out inherently inflationary items such as shelter, transportation, and medical care. With those sectors removed, the trends in inflation and deflation related to everyday purchases such as household goods become much more apparent.

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