"Green Shoots" for Inflation

Dow Chemical

A press release hit the wires a few minutes ago that ought to make people look again at the inflation meme.

"The Dow Chemical Company (NYSE:DOW) announced today that it will increase the off schedule prices for Acrylic Monomers in North America and Latin America, effective July 1, 2009, or as contracts allow. The increases are $0.10/lb or$220/MT for Acrylates, Methacrylates and Specialty Monomers.

The company also announced it will increase the off schedule prices in Europe and Asia for Acrylates, Methacrylates and Specialty Monomers by $0.3/lb or $70/MT, effective July 1, 2009.

These increases are necessitated by the continuous cost escalation of key rawmaterials used to manufacture monomer products."

Now Dow is a "building blocks" company. In its simplest terms, they make the stuff people use all over the world to make stuff we use. If they are increasing prices, then those prices either:

1- Get absorbed by the companies buying their chemicals, causing profits to fall or:

2- Get passed onto to end users (us) causing consumer prices to rise

We have been told repeatedly that inflation will not be a problem. Yet, we are beginning to see anecdotal evidence that it is brewing. Admittedly these are not widespread price increases but they are price increases that effect scores of industries.

It bears very close watching....

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