Inflation Alert: Diapers, Toilet Paper, Rent Rates All See Hike Due to Increasing Commodity Costs

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 |  Includes: AGG, DIA, KMB, SPY
by: TraderMark
More signs of "little to no inflation"... aka good news for the bottom 60% who are not getting any of the "wealth effect" from The Bernank, but all the costs. I am so tempted to make a comment about how the price increases in toilet paper can be offset by using an iPad per Fed head Dudley ... but that would be in bad taste. ;)
  • Kimberly-Clark (NYSE:KMB) is raising prices for diapers and bathroom tissue as it tries to deal with increasing costs. The consumer products company said Thursday that it will raise prices in North America for its baby, child care and consumer tissue businesses in the second and third quarters.
  • Kimberly-Clark said Thursday that net selling prices for items like Huggies diapers will go up 3% to 7% on average in the U.S. and Canada. Net selling prices for Cottonelle bathroom tissue will likely rise about 7% in the U.S.
It truly is amazing how the UK and U.S. measures of inflation differ so vastly mostly because the UK does not include a homeowners equivalent rent figure, while that line item dominates CPI in the U.S. [Jan 19, 2011: UK Facing Inflation Near 4%, Central Bank Keeps Rates Ultra Easy, Raising Public Ire] Speaking of OER - it looks like rents are set to spike as well, since so many Americans are being pushed out of houses and into rental units.
  • Renters beware: Double-digit rent hikes may be coming soon. Already, rental vacancy rates have dipped below the 10% mark, where they had been lodged for most of the past three years.
  • By 2012, she predicts the vacancy rate will hover at a mere 5%. And with fewer units on the market, prices will explode. Alford expects rents to spike 7% or so in each of the next two years -- to a national average that will top $800 per month.
  • In the hottest rental markets, the increases will likely top the 10% mark annually for the next couple of years, according to Lesley Deutch of John Burns Real Estate Consulting. In San Diego, she anticipates rents will rise more than 31% by 2015. In Seattle rents will climb 29% over that period; and in Boston, they may jump between 25% and 30%.

So to review, as long as you don't eat, drive, heat (or a/c) a home, use healthcare, have a child in college, or (insert new ones) rent an apartment, have a baby, or go to the bathroom - there is little to no inflation. Because you can buy iPads on the cheap.

(On a serious note - the theory here is without wage pressure in the U.S. there cannot be inflation because when Americans pay more for some things, they cannot pay for others yadda yadda yadda. The problem is the things Americans NEED are the ones going up in price, while the things that are for fun are the ones that are dropping).

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