Cold, Hard Reality; High Steel Prices Likely to Pinch Consumers Soon
As steel prices continue to rise, appliance maker Whirlpool Corp. has tried to fight back. It went to court and won a temporary restraining order preventing a steel supplier from raising prices above a contracted amount.</br></br>But Whirlpool had no long-term contract covering the price of stainless steel, which has also climbed, so recently the maker of refrigerators, dishwashers and ranges raised its own prices by 1.5 to 2 percent on appliances containing stainless steel.</br></br>When the price of steel spiked earlier this year, many manufacturers were stuck absorbing the full impact. But steel prices have continued to run high, and demand is up, so the cost increases are beginning to creep toward the consumer. Makers of construction materials, kitchen appliances, heating and cooling systems and other products with high steel content are raising prices for their distributors. Some economists think that could be an early sign of inflation.</br></br>Shoppers have yet to see much impact, though pressure is mounting on retailers to raise prices. Home Depot Inc., for instance, has seen prices jump on merchandise containing steel but "continues to use its scale and buying power to minimize price increases" for consumers, according to a statement the company sent to store managers.</br></br>As the Federal Reserve Board considers when to raise interest rates in the coming weeks, the price of steel -- and how that flows through to finished goods -- is likely to be a factor in the equation, said James W. Paulsen, chief investment strategist at Wells Capital Management.