Predictions 2008: Price Pressure

There will be three big factors influencing pricing in 2008 and all of them are likely to increase prices. The increase in the cost of oil is going to drive manufacturing and transportation costs up and if those increases are sustained as they have been in 2007, prices will have to follow. The falling value of the US dollar will also have an impact on prices, particularly if China loosens the yuan’s peg against the dollar. Finally, and perhaps most importantly, starting in January of 2008 China has promised to eliminate export subsidies on many of their manufactured good which currently reduce prices by 8-14% on many products.

The full effect of these factors won’t be seen in pricing here until 2009, but many prices are headed up starting in the new year, and any mid-year product launches will definitely reflect these increased costs.

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