http://seattletimes.nwsource.com/html/businesstechnology/2008076892_inflation28.htmlThe increases leave retailers in a bind: They can keep prices steady and cut profit margins or raise prices and risk sales.
Wal-Mart has been in the lead of aggressively keeping prices down, pressuring its competitors to do the same.
"We have seen inflation and we have passed some of that through," said John Simley, a Wal-Mart spokesman. "We have, wherever possible, worked with our suppliers to reduce the inflationary impact as much as possible."
Costco stock had its biggest drop in nearly five years Wednesday when the company said its fourth-quarter earnings would be "well below" Wall Street estimates of $1 a share as it delays price increases.
Stock in rival BJ's Wholesale Club fell more than 10 percent as investors feared the competitor would have to match Costco's prices.
Some economists say that once Americans spend their $106 billion in tax-rebate checks, consumer spending may shrivel, sparking a round of price cuts to entice shoppers. Others think price increases may be postponed, but they're on their way.
OK, did everybody get that? Prices up, consumer paychecks not keeping up, therefor consumers cut back on purchases. Stagflation.
