Week of December 4, 2023
Busting the “price gouging” myth. The deli pays $1 for bread/turkey, $1 for labor, and $1 for rent, meaning total costs are $3. The sandwich sells for $5 and profit is $2. Suppose, however, that the cost of materials, labor and rent double, totaling $6. But, the deli owner only has $5. Not enough capital to pay for the next sandwich. What to do? Go out of business? Brow beating business owners makes for good politics, but not good business. Fortunately, inflation in the US is moderating. Our Signals remain unchanged.
Bob Bilkie, CFA