Why Apple raised the price of the iPhone, but not in the U.S. and China - CNBC

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Customer inspects iPhone 14 Pro Max inside an Apple store in Marunouchi, Tokyo.

Stanislav Kogiku | SOPA Images | Lightrocket | Getty Images

Apple's newest iPhones, the series 14 models, come with better displays, cameras, and satellite messaging, among other features and updates. But depending on where you live, they also may come with a higher price tag.

While some analysts projected that Apple might increase the price of its latest iPhones across the board due to continued supply chain challenges and inflation, potential buyers in the U.S. and China saw no increases compared to the series 13 models.

But for consumers in markets like the U.K., Japan, Germany, and Australia, the newest models also came with significant price increases.

For example, the base iPhone 14 model starts at $799 in the U.S., the same price that the company charged for the iPhone 13 at its release last year.

In the U.K., the base iPhone 14 costs £849, or roughly $975. The base iPhone 13 was priced at £779, an increase of £70 or roughly $80.

That price difference only increases with the more enhanced models. For example, the iPhone 14 Pro Max in the U.K. is £150 more expensive than the equivalent last year's model.

The reason Apple took the step to increase the price of phones in those markets has to do with currency fluctuations.

"Essentially every currency around the world has weakened against the dollar," Apple CFO Luca Maestri said on the company's fourth-quarter earnings call with analysts last week. "The strong dollar makes it difficult in a number of areas. Obviously, our pricing in emerging markets makes it difficult, and the translation of that revenue back into dollars is affected."

While Apple reported that its revenue increased 8% in the quarter to $90.15 billion, Apple CEO Tim Cook told CNBC last week that the company would have grown "double-digits" if not for the strong dollar.

"The foreign exchange headwinds were over 600 basis points for the quarter," Cook told CNBC's Steve Kovach. "So it was significant. We would have grown in double digits without the foreign exchange headwinds." 

Foreign currency exchange is "a very significant factor that is affecting our results, both revenue and gross margin," Maestri said. Apple does hedge against its currency exposures "in as many places as possible around the world," he said, but those sorts of protections do start to reduce as the company needs to continue to buy new contracts.

But Apple also examines the foreign exchange landscape when it launches new products, Maestri said, which led to these most recent price increases.

"In some cases, for example, customers in international markets had to ... they saw some price increases when we launched the new products, which is not something that, for example, U.S. customers have seen," he said. "And that's unfortunately the situation that we're in right now with the strong dollar."

While recent currency fluctuations versus the U.S. dollar are causing some international buyers to pay more for an iPhone, there have been instances where Apple instead absorbed those costs.

In 2019, when the U.S. dollar also saw a rise in value compared to other currencies, Apple adjusted foreign prices in some markets and reset them to near or the same as they had been in local currencies a year prior.

However, the reason Apple did that was due to a decline in sales as a result of the price increase. For example, in Turkey, where the local lira had fallen 33% against the dollar in 2019, Apple's sales were down $700 million.

"We've decided to go back to [iPhone prices] more commensurate with what our local prices were a year ago, in hopes of helping the sales in those areas," Cook told Reuters in an interview at the time.

But in 2022, Apple says it has not seen any drop off in demand in those markets. Maestri noted that it saw double-digit growth in India, Indonesia, Mexico, Vietnam, and other countries even in their respective reported currencies.

"It's important for us to look at how these markets perform in local currency because it really gives us a good sense for the customer response to our products, the engagement with our ecosystem, and in general, the strength of the brand," Maestri said on the earnings call. "And I have to say, in that respect, we feel very, very good about the progress that we're making in a lot of markets around the world."

The U.S dollar has also risen steadily against the Chinese yuan over the six months, but there have been some signs that demand for the new Apple iPhones in the country might be weakening. While Maestri said Apple saw new September quarter records in Greater China, a recent report from Jeffries said that China sales of the four new iPhone 14 models over their first 38 days of being sold are down by 28% compared to the iPhone 13 models over the same period of time.

Here are some other comparisons of the prices of the base iPhone model between the 14 and 13 series:

Australia:

• iPhone 13: 1,349 Australian dollars
• iPhone 14: 1,399 Australian dollars

Japan:

• iPhone 13: 98,800 Japanese yen
• iPhone 14: 119,800 Japanese yen

Germany:

• iPhone 13: 899 euros
• iPhone 14: 999 euros

Companies feeling impact of strong dollar

Apple isn't the only company acknowledging the impact that currency headwinds are having on its business and pricing decisions.

McDonald's reported that currency dragged down its revenue by 7 percentage points, accounting for its 5% year-over-year decline in sales – which would have increased by 2% without the currency impact. With 60% of its sales coming from outside of the U.S., "Obviously, we're translating those sales back into less U.S. dollars," CFO Ian Borden said on the company's earnings call last week.

At P&G, the currency hit keeps getting bigger. The consumer products company reported a 6% decline in net sales due to "unfavorable foreign exchange," which followed 3% and 4% negative currency impacts in each of its previous two quarters. The company had to raise its forecast for the exchange rate impact this year to $1.3 billion, with CFO Andre Schulten saying on the company's earnings call last week, "Foreign exchange has continued its strong move against us."

James Quincey, CEO of Coca-Cola, which makes approximately 80% of its earnings outside the U.S., said the dollar has been a high single-digit headwind this year. "It's likely to be a big headwind like that next year," Quincey said on CNBC's "Squawk on the Street" last week.

Coca-Cola, like Apple, has looked to offset some of the currency headwinds by raising prices, something it said it expects to continue to do as the U.S. dollar shows little signs of waning. "We are expecting pricing to be ahead of normal next year on top of what's happened this year," Quincey said.

So far, Coca-Cola has not reported demand dropping as a result of the higher prices, but Quincey did say there are some potential consumer concerns on the horizon.

"We do see our consumers are beginning to respond in a traditional way they would in a recession; delaying discretionary and high-ticket discretionary items and perhaps going to more private label or discount dollar channels," Quincey said, noting "some effects of reduction of purchasing power out there in the marketplace."

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Opinion | How the Price of Gas Became America’s Most Important Political Issue - The New York Times

President Biden knows the political power of the price of gasoline.

About two weeks ago, fearing what an uptick in gas prices might do to Democrats at the ballot box in the midterms, Mr. Biden announced the release of 15 million barrels from the United States’ emergency petroleum stockpile in an effort to drive down prices. A gallon now costs $3.78 on average compared with $5.03 five months ago, but that is still higher than what Americans want to pay.

To show he means business, Mr. Biden went a step further this week, calling on Congress to consider a windfall profits tax on oil companies, which are reaping record gains since Russia’s invasion of Ukraine and a spike in oil prices. “It’s time for these companies to stop war profiteering,” Mr. Biden said.

As he contemplates whether these measures will be enough to save his party on Tuesday, he seems to be recalling the early days of his political career. Mr. Biden entered the Senate in 1973, at the age of 30, just as the energy crisis of the 1970s was changing life as Americans had known it. In October of that year, in response to America’s support of Israel in the Yom Kippur War, OPEC’s Arab members imposed an embargo on the United States, sending prices soaring by more than sevenfold.

To understand the consequences of this price hike, the young senator from Delaware hitched a ride on a 47,000-pound big rig hauling hollow-shell pipe for a 15-hour, 536-mile journey through five states. After talking to hundreds of angry truckers at a stop in Shiloh, Ohio, Mr. Biden was sympathetic. The winter storm he had just driven through was, he said, “nothing compared to the snow job truck drivers I met believe the government is handing them.”

The energy situation would spell political trouble for President Richard Nixon, already deeply wounded by Watergate, as Americans blamed elected officials for their troubles. Millions of Americans were waiting in lines to fill up their tanks and feeling the pinch of higher prices on their family budgets. “What is worse than ‘Watergate’ and all the various charges against the president? Answer — the gas crisis in Bergen County,” a suburban New Jersey man wrote to his senator. “We the American People are tired of the lack of competent and effective leadership,” the Concerned Citizens of Maryland told Mr. Nixon.

Jimmy Carter, then the governor of Georgia, accused his predecessors of “gross mismanagement” as he ran for president seeking to quell the energy crisis. But after his 1976 election, Mr. Carter wasn’t so lucky: A second oil shock struck in 1979, this one triggered by unrest in Iran. Prices soared again, up more than 1,000 percent since the start of the decade. “I’ll give it to you straight,” Mr. Carter said in 1979. “Each one of us will have to use less oil and pay more for it.”

There was a “panic at the pumps,” as a New York service station representative called it at the time, leading to gas riots, violence, economic chaos and more. Long lines lasted for hours and soaring prices broke the dollar-a-gallon barrier, resulting in a sense of defeat and national decay. Americans are being “crucified on the cross of inflation,” a group of Chicago truckers said. “People are freaking out,” the California Energy Commission’s chairman said. No one came in for more blame than Mr. Carter. “Energy affects the life of every goddamn American, and most of them are mad at us,” a White House aide told Newsweek. “Energy is our Vietnam,” another official said.

In 1980, Ronald Reagan defeated Mr. Carter — the first Democratic president of Mr. Biden’s political career — in a landslide.

---

By the end of the 1970s, the price of a gallon of gasoline had become one of the most explosive issues in American political life. It still is. When presidents see gas prices tick up, they inevitably get a sick feeling in their stomachs. Rising gas prices tend to correlate with a decline in presidential approval ratings, which in turn erodes support for the incumbent party at the polls.

In times of economic instability, gas prices are the most visible and easily understandable gauge of how the nation is faring: Outsize placards on every street corner and at every rest stop are a constant reminder for many citizens that times are tough, neon signs that shine projections of pocketbook pain down to the thousandth of a decimal. You don’t need to know much about macroeconomics or public policy to know that you’re being squeezed.

America lives under the shadow of King Oil because our lives are organized around our cars and our cars run on gasoline.

The roots of this dependence go back to before the 1970s oil shocks, to the postwar years when America’s economy boomed, thanks to cheap and plentiful gas. The country was building a massive system of interstate highways made possible by the 1956 Interstate Highway Act; developers erected single-family suburban homes that required a car trip just to pick up a pint of milk; the government failed to invest in mass transit. Gas stations competed with giveaways and free windshield washings. The drive-in movie theater and the drive-through restaurant had become icons of American culture. Cars grew and grew in size until they became living rooms on wheels. With their tail fins, luxurious interiors and powerful engines, cars were the embodiment of American freedom.

Until they weren’t. “The great American ride is ending,” the title character in “Rabbit Is Rich,” John Updike’s iconic novel of late-’70s America, thinks to himself as he surveys his car lot. Instead of singing about the open road, Johnny Cash made commercials, paid for by oil companies, about the need to “drive slow and save gas.”

Gas lines in Midtown Manhattan in May 1979.Sara Krulwich/The New York Times

Appeals to conservation went unheeded. Americans refused to consume less; we resisted developing new forms of energy. As a result, the nation was running in place. Americans wanted everything to be the same.

By the time Mr. Reagan left office in 1989, there were over 30 million more cars on the road than there had been at the start of the energy crisis in 1973. And in spite of calls for energy independence, America got more and more of its oil from the Persian Gulf. It was not a surprise, then, that President George H.W. Bush, himself an oilman, launched a military operation in 1991, Operation Desert Storm, in response to Saddam Hussein’s attack on Kuwait. “We cannot allow any tyrant to practice economic blackmail,” he said.

President Bill Clinton’s term did little to wean America off its oil addiction. During his administration, S.U.V.s, which were not subject to fuel efficiency standards, were coming to dominate the market. No wonder that in 2000, as gas prices spurted up, in advance of the election, Mr. Clinton released oil from the strategic reserve, a fail-safe created in the 1970s. His solution to higher prices was to flood the market with product rather than to stem demand, hoping to bolster the electoral prospects of Al Gore, his vice president and a passionate environmentalist.

That story has continued to play out. In 2008, congressional Republicans attempted to lay the blame for record-high prices on House Speaker Nancy Pelosi, calling it the “Pelosi Premium.” The strategy failed, given the collapse of the economy when George W. Bush was in the White House. But the effort reflected the political reality of prices at the pump, still the case today. The question is: How long can this last?

---

Mr. Biden has watched as his party’s political fortunes have been driven by the ups and downs of energy prices since the early 1970s. Over those nearly 50 years he has undoubtedly discovered the tension at the heart of this: While politicians live and die in the short term, it’s only long-term policies that can offer an enduring solution.

Gas prices are down now, but are they down enough to help his party next week? And will they stay down ahead of the 2024 presidential election? Those questions are most likely on the top of Mr. Biden’s mind.

In 1981, when Mr. Reagan, soon after taking office, used his executive authority to get rid of the price controls on oil that had come into effect during the crisis, Mr. Biden objected. “We must continue to fight for more responsible energy economic policy,” he wrote in an op-ed. By that he meant a “permanent” windfall tax on oil companies, which at the time were reaping record profits. The taxes would pay for relief from the “excessive costs” of energy.

In the 1970s, Democrats thought the oil hikes that followed war and revolution in the Middle East required an equally drastic political response: price controls, rationing and corporate profit caps. Today, with OPEC price hawks taking advantage of another war, polls suggest that Mr. Biden would see enormous political and electoral dividends by imposing temporary price and profit controls on the industry. Some economists, like the Nobel laureate Joseph Stiglitz, agree.

So, too, do many members of Congress. “We know that big oil companies are exploiting Putin’s invasion of Ukraine to drive up prices at the pump for American families,” Senator Sherrod Brown of Ohio, a Democrat, recently told me. “This sort of profiteering is unacceptable and we need to put a stop to it. A windfall profits tax would help us take on corporate power and deliver relief directly to families.”

Now Mr. Biden is listening to the lessons of his long career. His release from the strategic petroleum reserve comes after a similar move nearly a year ago, followed up by a failed effort to get OPEC to increase its production and the jawboning of oil companies. “You should not be using your profits to buy back stock or for dividends,” the president said. “Not now. Not while a war is raging.” Instead, he said, “Bring down the price you charge at the pump.” Or else — as he told the companies this week.

But just as he is trying to ease Americans’ pain, he also recognizes that the permanent solution comes from weaning ourselves off fossil fuels from foreign powers, like Russia and Saudi Arabia, that see oil as a geopolitical weapon. Even a young Joe Biden understood this: In the weeks after the 1973 Arab embargo, he was one of five senators who voted against the Trans-Alaska Pipeline and instead supported funding mass transit.

What was never really on the table was using less gas and driving fewer cars. President Carter tried to solve the energy crisis, in part, with a famous prime-time speech asking the United States to change its wasteful, self-indulgent ways, as Americans were waiting in gas lines. It was a colossal failure. The installation of solar panels on the White House roof, when Mr. Carter promised that 20 percent of all energy would come from the sun and other renewable sources by 2000, also fell flat.

Mr. Biden knows this. That’s why he has worked hard to make renewable alternatives a reality with the Inflation Reduction Act, a climate bill investing historic amounts into a green transition. And as much as he, like so many presidents, champions himself as a “car guy” who loves his 1967 Corvette Stingray, he has also celebrated recent pushes like Ford’s to phase out combustion engines.

But those changes take time. Just as they have since the 1970s, voters want relief and they want it now. In 1973, Mr. Biden said his constituents felt that “the federal government isn’t listening.” Nearly half a century later, as Americans take to the polls, Mr. Biden wants them to know “who is standing with them and who is only looking out for their own bottom line.”

Even as Mr. Biden might get minimal short-term benefits from his energy and climate policies — and minimal relief in gas prices in the near future — history may look back on his record as a turning point, when America didn’t just start ending its gas addiction but went further into alternatives that began making our country and our politics less in thrall to King Oil.

Meg Jacobs teaches history and public affairs at Princeton and is the author of “Pocketbook Politics: Economic Citizenship in Twentieth-Century America” and “Panic at the Pump: The Energy Crisis and the Transformation of American Politics in the 1970s.”

The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.

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G7 Russian oil price cap applies only to seaborne crude -official - Reuters

WASHINGTON, Nov 4 (Reuters) - The price cap on Russian oil exports to be imposed by G7 countries and Australia next month will apply only to seaborne cargoes through the first landed sale and will exclude shipping and trading costs, a coalition official said on Friday.

Details of the price cap are being finalized as a Dec. 5 deadline for launching the scheme and a European Union embargo on Russian crude approaches, but discussions on the level of the price cap are still continuing. The plan aims to scales back Moscow's oil revenues to levels prior to its invasion of Ukraine while keeping Russian crude on the global market to avoid further price spikes.

Coalition officials told Reuters on Thursday that the price level be a fixed per-barrel dollar price that would be regularly reviewed, rather than a discount from market prices.

Under the loading rules, first reported by the Wall Street Journal, any oil that is re-sold while the crude is still en route to a landed destination must be priced at or below the cap level, the official said.

"Once the oil completes its first landed sale, it can be sold at market prices," the coalition official said. "As long as it doesn't go back out to sea it's no longer 'seaborne' Russian oil."

But if it is loaded back onto a tanker to be shipped elsewhere, the price cap again applies unless the crude has been substantially refined into other products, the official added.

The cap will not include the cost of freight or other trading and transportation costs, the official said, adding "In other words it will only apply to the physical molecules of Russian crude and refined products themselves -- only the oil is capped.

Official oil price cap guidance is still under development and will be released before Dec. 5, the official added.

Reporting by David Lawder; Editing by David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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EXCLUSIVE G7 coalition has agreed to set fixed price for Russian oil -source - Reuters.com

WASHINGTON/LONDON, Nov 3 (Reuters) - The Group of Seven rich nations and Australia have agreed to set a fixed price when they finalize a price cap on Russian oil later this month, rather than adopting a floating rate, sources said on Thursday.

U.S. officials and G7 countries have been in intense negotiations in recent weeks over the unprecedented plan to put a price cap on sea-borne oil shipments, which is scheduled to take effect on Dec. 5 - to ensure EU and U.S. sanctions aimed at limiting Moscow's ability to fund its invasion of Ukraine do not throttle the global oil market.

“The Coalition has agreed the price cap will be a fixed price that will be reviewed regularly rather than a discount to an index," said a coalition source, who was not authorized to speak publicly. "This will increase market stability and simplify compliance to minimize the burden on market participants.”

The initial price itself has not been set, but should be in coming weeks, multiple sources said. Coalition partners agreed to regularly review the fixed price and revise it as needed, the source said, without disclosing further details.

Pegging the price as a discount to some index would have resulted in too much volatility and potential price swings, the source added.

The coalition worried that a floating price pegged below the Brent international benchmark might enable Russian President Vladimir Putin to game the mechanism by reducing supply, a second source with knowledge of the discussions said.

Putin could benefit from a floating price system because the price for his country's oil would also rise if Brent spiked due to a cut in oil from Russia, one of the world's largest petroleum producers. The downside of the agreed fixed price system is that it will require more meetings of the coalition and bureaucracy to review it regularly, the source said.

U.S. Treasury Secretary Janet Yellen and other G7 officials argue the price cap, set to begin Dec. 5 on crude and Feb. 5 on oil products, will squeeze funding to Russia without cutting supply to consumers. Russia has said it will refuse to ship oil to countries that set price caps.

Shipping services are eager to see more details about the G7 plan which is due to take effect in a month.

A steady price cap could enable insurers to more confidently roll over contracts and initiate new ones without fear that the price could be adjusted by the countries buying Russian oil, which could have potentially exposed insurers to sanctions.

No immediate comment was available from Treasury or the embassies of coalition members, which include the G7 rich nations, the European Union and Australia.

Reporting by Andrea Shalal and Timothy Gardner in Washington and Noah Browning in London Editing by Heather Timmons and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

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Study: Home Price Declines Hitting Western U.S. Markets - Florida Atlantic University

---

Average home prices are falling in 39 of the 100 largest U.S. housing markets and prices in an additional 18 metropolitan areas are expected to decline soon, according to researchers at Florida Atlantic University and Florida International University.

The September price drops from market peaks occurred mainly in the West, with the largest in San Jose, California, at 6.3 percent. Austin, Texas (5.5 percent); San Francisco (4.4 percent); Boise, Idaho (4.2 percent); and Salt Lake City, Utah (3.8 percent) round out the top five.

Meanwhile, premiums are falling in 18 metro areas, including Atlanta, Chicago, Houston, New York and Orlando. Premiums are the percentage above long-term pricing trends that buyers must pay to secure properties. A premium decline usually is a precursor to a drop in average price.

The researchers also rank the most overvalued housing markets by studying long-term pricing trends back to 1996, with data covering single-family homes, townhomes, condominiums and co-ops.

Cape Coral-Fort Myers is the nation’s most overvalued market, with buyers paying a premium of 68.69 percent. Four other Florida markets are in the top 10, with the top 17 markets all overvalued by more than 50 percent. 

The full rankings with interactive graphics can be found here.

“Housing markets across the country are definitely slowing down and appear to be reaching the peaks of their current housing cycles,” said Ken H. Johnson, Ph.D., an economist in FAU’s College of Business. “Buying a home now in much of the country is risky because values likely will fall if they haven’t already, but I doubt we’ll see anything close to the downturns that occurred 15 years ago.”

The rankings don’t consider how expensive a market traditionally is. High-cost areas such as New York and San Francisco are among the least overvalued because homes in those metros are selling relatively close to where they should be, based on historical trends, according to the study.

While average prices continue rising in most of Florida, Cape Coral-Fort Myers (before the impact of Hurricane Ian) and North Port-Bradenton showed the state’s first price declines from their market peaks.

“It is hard to say where prices will go from here in Florida,” said Eli Beracha, Ph.D., of FIU’s Hollo School of Real Estate. “But it seems most likely that Florida housing markets will fare better than most other markets across the country due to the persistent shortage of homes for sale and the pace at which people are relocating to the state.”

In general, markets with increasing population and significant inventory issues will see fewer impacts on prices, while other areas with stagnant or declining populations and more homes on the market could see significant price declines, the researchers said.

-FAU-

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Food Prices Soar, and So Do Companies’ Profits - The New York Times

Some companies and restaurants have continued to raise prices on consumers even after their own inflation-related costs have been covered.

A year ago, a bag of potato chips at the grocery store cost an average of $5.05. These days, that bag costs $6.05. A dozen eggs that could have been picked up for $1.83 now average $2.90. A two-liter bottle of soda that cost $1.78 will now set you back $2.17.

Something else is also much higher: corporate profits.

In mid-October, PepsiCo, whose prices for its drinks and chips were up 17 percent in the latest quarter from year-earlier levels, reported that its third-quarter profit grew more than 20 percent. Likewise, Coca-Cola reported profit up 14 percent from a year earlier, thanks in large part to price increases.

Restaurants keep getting more expensive, too. Chipotle Mexican Grill, which said prices by the end of the year would be nearly 15 percent higher than a year earlier, reported $257.1 million in profit in the latest quarter, up nearly 26 percent from a year earlier.

Although food companies are prominent examples of how rapid inflation is being passed from producers to consumers, the trend is evident across a wide variety of industries. Executives from banks, airlines, hotels, consumer goods companies and other firms have said they are finding that customers have money to spend and can tolerate higher prices.

And this makes it harder for the Federal Reserve to achieve its goal of bringing down inflation by aggressively increasing interest rates. Fed officials are set to announce their latest rate decision on Wednesday afternoon.

For years, food companies and restaurants generally raised prices in small steps, worried that big increases would frighten consumers and send them looking for cheaper options. But over the last year, as wages increased and the cost of the raw ingredients used to make treats like cookies, chips, sodas and the materials to package them soared, food companies and restaurants started passing along those expenses to customers.

But amid growing concerns that the economy could be headed for a recession, some food companies and restaurants are continuing to raise prices even if their own inflation-driven costs have been covered. Critics say the moves are all about increasing profits, not covering expenses. Coca-Cola, PepsiCo and Chipotle did not respond to requests for comment.

“The recent earnings calls have only reinforced the familiar and unwelcome theme that corporations did not need to raise their prices so high on struggling families,” said Kyle Herrig, the president of Accountable.US, an advocacy organization. “The calls tell us corporations have used inflation, the pandemic and supply chain challenges as an excuse to exaggerate their own costs and then nickel and dime consumers.”

So far, food companies and restaurants have been able to raise prices because the majority of consumers, while annoyed that the trip to the grocery store or drive-through for takeout costs more than it did a year ago, have been willing to pay. But there are plenty of shoppers, including those with lower incomes or retirees on fixed budgets, who say the higher prices have led to changes in their routines.

Diane English, an 80-year-old partly retired artist who lives with her partner in Asheville, N.C., said she now shops at lower-price grocery stores like Aldi so she can afford her groceries. She also has stopped buying certain foods because they’re simply too expensive.

“I can’t remember the last time we had steak,” said Ms. English. A couple of weeks ago, she said, she looked at the meat department at the Fresh Market, a grocery store chain, and was dispirited at the high prices she found.

“We’re not going to do that,” she said. “We can’t.”

Over the last year, the price of food eaten at home has soared 13 percent, according to the Bureau of Labor Statistics, with some items spiking even higher. Cereals and bakery goods are up 16.2 percent from a year ago, closely followed by dairy, which has risen 15.9 percent.

The cost of eating at restaurants has risen 8.5 percent over the same period.

Even food executives have been surprised by how well the higher food prices have been accepted.

On a call with investors, James Quincey, Coca-Cola’s chief executive, said customers continued to buy the company’s products despite economic challenges.

“In the face of these pressures, consumers stayed resilient, and we continue to invest behind our loved brands to drive value in the marketplace and growth in our business,” Mr. Quincey said.

Investors and analysts are wondering when rising prices will start to keep more people away from restaurants.Amir Hamja for The New York Times

This summer, on a call with other Wall Street analysts, Jason English, an analyst at Goldman Sachs, noted that the food giant Conagra Brands had been able to price its products above inflation rates and recovered its profit margins.

Sean Connolly, the president and chief executive of Conagra, said that manufacturers saw their profits hit early by inflation and that maintaining robust profits was crucial to developing new products.

“We have to have healthy margins to be able to build out that innovation and get it to our customers in the market,” Mr. Connolly said on the call. Conagra did not respond to a request for comment for this article.

Likewise, investors and analysts are closely watching the continued price hikes at Chipotle, wondering when it will become too much for its customers. In late October, the company said its profit margin widened in the third quarter, since it was able to increase the prices it charges faster than its own costs rose. The company said its prices in the final three months of the year would be nearly 15 percent higher than they were a year earlier.

“The average entree was around $8 nationally two years ago, and they’ve maybe taken $1.50 in price in the past two years,” said Sharon Zackfia, group head of consumer research at William Blair & Company.

She added: “I am intrigued by what happens when commodities fall again, and how do restaurants offer more value to the consumer without lowering prices? In the long arc of history, most restaurants do not lower prices.”

Still, some cracks are emerging. Not all companies have increased profits. Profit at McDonald’s, for example, fell because of how the strong U.S. dollar has weakened other global currencies. High prices for deli meat, fresh fish and frozen dinners have led some shoppers to stop buying those products, according to data from Information Resources, a research firm.

Executives at Darden Restaurants said in September on a call with analysts that households with less than $50,000 in annual income were feeling the overall effects of inflation and eating less frequently at its Olive Garden and Cheddar’s restaurant chains. Rick Cardenas, the chief executive of Darden, said, “We are seeing softness with these consumers while conversely, we are seeing strength with guests in higher income households.”

Nicole Blaha, 53, who lives in Scottsdale, Ariz., started going to Walmart more frequently to stock up on things like granola bars and cereals to save money. She also uses an app called Ibotta to receive cash back on some of her purchases. It is one area of her life that has been affected by inflation where she feels she can make substantiative changes.

“I actually find it easier to kind of work with the groceries piece and try to save some money where I can,” Ms. Blaha said. “You can’t argue with the electric bill.”

In grocery stores, consumers began increasingly switching to less expensive store brands in March, executives at TreeHouse Foods, a company that makes cookies, crackers, pickles and beverages for retailers, told Wall Street analysts on a call in August.

Steve Oakland, the chief executive of TreeHouse, told analysts that “consumers are making changes to reduce their spending, which include embracing store brands and the value that they represent.”

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Oil Prices Rise As Bullish Sentiment Builds - OilPrice.com

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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By Irina Slav - Nov 02, 2022, 2:45 AM CDT

• Oil prices were up early on Wednesday morning on renewed rumors that China is preparing to loosen its Covid restrictions.
• The American Petroleum Institute had already added to bullish sentiment on Tuesday afternoon when it reported another decline in oil inventories.
• An increasing number of analysts see oil prices rising back above $100, with multiple bullish catalysts looming in the next couple of months.

Crude oil began trade today with a gain on the back of expectations that China may begin to ease its Covid restrictions and on data from the American Petroleum Institute pointing to another decline in U.S. crude oil inventories.

China’s Covid lockdowns have been one of the big headwinds for oil prices, keeping a lid on any rally since the summer as one of the world’s biggest consumers continues with its zero-Covid policy.

Yet stock price movement data this week reflects growing hopes that Beijing will soon begin to relax restrictions, which would have a strong positive effect on oil demand and, therefore, prices.

Meanwhile, the API estimated that crude oil inventories in the United States had shed 6.53 million barrels last week, with gasoline stocks also declining, by 2.64 million barrels, while distillate stocks added a modest 865,000 barrels, according to the industry group.

Government data on crude oil and fuel inventories is due out later today.

On Tuesday, crude oil benchmarks Brent and WTI both gained about 2 percent thanks to the news from China but also to a weaker U.S. dollar, after their first monthly gain since May, as October proved cumulatively positive.

Analysts quoted by Reuters in a recent report have pointed to even higher prices, too, citing the OPEC+ production cuts, record U.S. exports, and the possibility that the Biden administration will stop releasing crude from the strategic petroleum reserve.

Meanwhile, OPEC reported steady production rates through October despite an agreement to cut output by a modest 100,000 bpd, which was more symbolic than actual with so many members of the cartel already falling short of their quotas.

Russia’s October output, however, was significantly lower than a year ago, at 9.9 million bpd. This compares to an OPEC+ quota of 11 million bpd.

By Irina Slav for Oilprice.com

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Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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