[quote=SD Realtor]The manager at ralphs will simply pass on his expenses. It is pretty easy to follow the commodity trail. Start at the cost of water and fuel. People who grow everything from fruits/vegetables to feed for cattle/pigs etc incur higher prices. Increasing fuel prices also impact them and the transporters who are needed for the supply chain. Cotton and other things that are grown for textiles and clothing are affected. Pretty much everything at the base is affected and as you move up the manufacturing chain additional costs are added.
The manager at Ralphs has nothing to do with it. he is simply the endpoint in the supply chain.
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Commodity prices are just one point in the chain. Labor costs are many times the largest expense and they are relatively flat. Commercial real estate prices and rents are flat to down. There can be many scenarios in which a commodity prices have risen but prices are flat to down. It all depends on how big of a percentage commodity prices are of the end product pricing and what the other inputs are doing.
I personally think CPI has generally got things correct, disinflationary conditions. But recently (since late summer) I have noticed pricing power by lower end retailers (in fact most of the softness I have personally witnessed is in the higher end brands).
