It has been found that consumers in the United States continue to open their wallets despite the price hikes of various products.
This result suggests that it may take a long time for prices of daily necessities to subside, but some point out that consumers’ ability to accommodate inflation is approaching its limit.
According to the Wall Street Journal (WSJ) on the 25th, McDonald’s disclosed its first quarter earnings on the same day and announced that same-store sales increased by 12.6% compared to the same period last year.
This is a result that far exceeds the forecast of Wall Street analysts (8.2%). Overall sales also exceeded the market forecast at $5.9 billion, and net profit soared 63% from the same period last year to $1.8 billion.
It can be attributed to the fact that more customers visited McDonald’s stores despite the price hike of products such as hamburgers.
PepsiCo also announced its first-quarter earnings on the same day, saying that despite raising consumer prices by more than 13% last quarter, sales were $17.9 billion, up 10% from the same period last year.
Thanks to still strong consumer demand, we also raised our annual sales growth forecast for this year from 6% to 8%.
Kimberly-Clark, famous for Huggis and Kleenex, also saw both sales and profits grow, and earnings per share far exceeded the Wall Street consensus. Despite raising prices by more than 10% for two consecutive quarters, it seems that they have not been hit at all.
Automaker General Motors (GM), which also released its first quarter results on the same day, exceeded market expectations in both sales ($39.99 billion) and earnings per share ($2.21) thanks to strong demand for luxury models. GM also raised its annual profit guidance for this year from 10.5 to 12.5 billion dollars to 11 billion to 13 billion dollars on the same day.
Procter & Gamble (P&G), which released its first quarter results on the 21st, also announced that sales increased by 4% compared to the same period last year because of raising prices to double digits for two consecutive quarters.
However, not all companies benefited from the price increase.
In the case of Nestlé, sales fell below market expectations in the aftermath of a price increase of nearly 10%.
There are signs that consumers’ patience with price hikes is running out due to concerns about the recent cooling labor market and economic recession.
AT&T, a large telecommunications company, said in its recent earnings announcement that new demand for wireless communication is decreasing in the aftermath of corporate layoffs and cost cuts, and that Americans continue to use old cell phones.
Competitor Verizon also announced on the same day that its sales decreased by 1.9% due to a decrease in wireless subscribers.
Amid this, Corona Beer announced that it would reduce the range of price hikes in consideration of the slowdown in sales growth, and Coca-Cola, which is still showing an increase in both sales and profits, said it would slow down its price increase within the year.