P&G’s Price Increases and Goods Inflation

I am quoted in the International Business Times:

“P&G has been able to raise prices as a result of both its pricing power on its well-established brands that are perceived to be of high quality, as well as the financial strength of consumers,” David I Kass, a finance professor at the University of Maryland’s Robert H. Smith School of Business, told IBT.

“As a result of the recent monetary and fiscal stimulus in response to the pandemic. Consumers with higher than average incomes have been relatively price insensitive and generally have had an inelastic demand for household goods.”

Kass doesn’t expect the tailwind from robust spending to continue, as consumers run out of accumulated savings and the government stimulus programs are depleted. “Consumers are likely to become more price sensitive, which should lead to the substitution of lower cost goods and, therefore, a reduction in goods inflation,” he added.