by Alyssa Oursler | September 20, 2012 11:00 am
Between a rally-sparking third round of quantitative easing and protest-sparking Middle East controversy, crude oil prices soared to a four-week high last week before again finally falling in the past few days to early-August lows.
But despite the recent drop, the longer-term rise in energy still is a tough reality for consumers. The pain is being felt at the pump — this week, average prices for regular of $3.85 per gallon were around 27 cents more than a year ago. The cost of jet fuel also is on the rise, and carriers are passing that onto consumers. Southwest Airlines (NYSE:LUV) led the way with another fare hike recently, making for the sixth increase so far this year on top of the nine successful hikes last year.
All those fuel woes are plucking consumer wallets. Just look at the Consumer Price Index, which saw a 0.6% increase in August — the largest gain in the past three years, and spurred primarily by an uptick in fuel prices.
But if you take a minute to move past all the oil-centric headlines … well, you won’t like what you see there, either. In addition to oil, countless other commodities are on the rise, which means you, the consumer, will feel their impact as well.
Here are five generally overlooked — but still commonly used — goods that already are feeling the effects of inflation:
Peanut oil can be bought at your local Kroger (NYSE:KR) or Safeway (NYSE:SWY), of course, but also is used for frying foods at restaurants like Five Guys, Chick-Fil-A and Brinker International’s (NYSE:EAT) Chili’s. But right now, a poor peanut harvest combined with rising transportation costs (gas prices strike again) are putting the hurt on this cooking staple.
In August alone, the price of peanut oil gained 3.4%. Prior to that, prices surged 13% in May, then only fell slightly in the months between; overall this year, the commodity has jumped 20% in price.
Olive oil was another big mover last month, and its rising price is only expected to keep going up thanks to a damaged crop in Spain, the largest exporter of the commodity. In fact, things are so bad that world output of the oil could fall almost 20% during the next year.
Already, olive oil prices spiked nearly 10% last month, basically offsetting the steady declines prices saw over the past year. Olive oil is a staple in most kitchens, home or otherwise.
After a flat streak, the price of tea has seen small but steady gains the past two months thanks to poor weather conditions and a resulting lackluster harvest. In August, prices climbed 2.2%, compounding the 1.4% rise the month prior.
This is a new trend, as prices fell dramatically in the last months of 2011 and have still not made their way back up to last year’s highest levels. However, if this trend continues — as it is expected to thanks to rising demand — companies like Green Mountain Coffee Roasters (NASDAQ:GMCR), Starbucks (NASDAQ:SBUX) and Unilever (NYSE:UL), which owns the Lipton brand, could all feel the effect and possibly pass some of the pain on to tea-lovers.
Fresh fruit also spiked in the last month and played a role in the remaining 20% increase in the CPI. Fruit and vegetables together fell in July, but rose in August thanks to a roughly 2% jump in prices that offset a 1.3% drop for veggies. Gas prices again helped the push, along with unfavorable exchange rates.
All these rising prices might drive consumers to start drinking — but that’ll cost more, too. The price of barley — a common ingredient in beer — increased by more than 7% in August, on top of its 8% gain in July thanks to (surprise, surprise) drought conditions. In fact, in the past three years, prices have seen a whopping 160% increase.
For the most part, larger beer suppliers like Anheuser-Busch InBev (NYSE:BUD) and Molson Coors Brewing Company (NYSE:TAP) have deals with suppliers that protect them from swings in the grain market. Still, it’s a trend to keep an eye on — especially if you enjoy local microbrews.
Worst of all: Ben Bernanke’s announcement of more quantitative easing is expected to make things worse. Expectations for inflation shot up in the wake of QE3, as the Fed is expected to tolerate more inflation in exchange for more jobs.
Then again, consumers might just be OK with having to pay a little more for their olive oil or morning cup of tea if they actually have a job in the first place. But that’s a pretty big “if.”
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.
Source URL: http://investorplace.com/2012/09/5-overlooked-goods-suffering-from-inflation/
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