(ZEROHEDGE) – The inconvenient truth about persistent inflation at four-decade highs is wage gains for average workers have evaporated. Even though wages are increasing, inflation is going up much faster. That means purchasing power for consumers is reduced, and consumer goods companies are on thin ice as to how much they can raise prices until consumers alter spending habits.
Macy's Inc. CEO Jeff Gennette recently told WSJ they tried to raise prices on some mattresses and sofas by $100 and were met with fierce consumer push back. Clothing brand Bella Dahl hiked shirt prices by $20 and immediately saw sales crater. "There was a revolt," said Steven Millman, Bella Dahls' brand officer. "If we go any higher, we'll do half the sales."
Some department stores and apparel retailers are hitting thresholds for how much they can raise prices. There was very little resistance from consumers as inflation began to rise over the last year. Now, inflation levels are the highest since 1982, and industry executives and analysts believe a price ceiling could be nearing as any higher would suggest demand destruction, sending consumers into hibernation mode.
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