The rapid rise in commodity prices over the past year has spurred concerns that businesses would soon need to raise prices to help offset those added business costs. According to a new report, restaurants are beginning to hike prices as surging food prices eat into profit margins.
Analysts had speculated whether restaurants would raise fees, especially with the tepid economic growth the U.S. has witnessed over the past year. However, restaurants are now raising prices on menu items as they bet that consumers will pay more to eat out, Bloomberg reports.
Restaurants are taking a cue from airlines, which added a wide swath of fees following hikes to oil prices, according to Barclays Capital chief U.S. economist Dean Maki. "The fact that the airline industry was able to pass along cost increases signals that the pricing environment has become somewhat more favorable than it was during the heart of the recession," Maki said in an interview. "It's more likely restaurants will be able to pass along price increases now relative to the last few years."
The added business costs have spurred calls for the Fed to control inflationary pressures. While Fed chairman Ben Bernanke publicly said he thinks higher inflation is "transitory," some analysts worry that the Fed isn't taking the threat of quickly climbing consumer prices seriously enough.
Analysts had speculated whether restaurants would raise fees, especially with the tepid economic growth the U.S. has witnessed over the past year. However, restaurants are now raising prices on menu items as they bet that consumers will pay more to eat out, Bloomberg reports.
Restaurants are taking a cue from airlines, which added a wide swath of fees following hikes to oil prices, according to Barclays Capital chief U.S. economist Dean Maki. "The fact that the airline industry was able to pass along cost increases signals that the pricing environment has become somewhat more favorable than it was during the heart of the recession," Maki said in an interview. "It's more likely restaurants will be able to pass along price increases now relative to the last few years."
The added business costs have spurred calls for the Fed to control inflationary pressures. While Fed chairman Ben Bernanke publicly said he thinks higher inflation is "transitory," some analysts worry that the Fed isn't taking the threat of quickly climbing consumer prices seriously enough.
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