Inflation Genie Has Left The Bottle, Not Going Back Easily

Babies and possibly PM investors/traders in response to increased volatility are beginning to feel the pinch of rising cost of diapers. The inflation ball is rolling. The talk of containment well after the fact may be good headline fodder, but practical economic reality suggests it has no legs.

Headline: Whoa Baby, Prices Are Jumping for Diapers, Other Family Basics

As commodity costs rise, babies are feeling the pinch.

Betting that parents are less stingy when it comes to junior's needs, two of the country's biggest makers of diapers and wipes are pushing through price increases. Kimberly-Clark Corp. plans to raise prices on its Huggies diapers and wipes by 3% to 7% while Procter & Gamble Co. announced a 7% rise in prices for its Pampers diapers and 3% increase on wipes.

Shoppers are less likely to switch to a cheaper brand on a baby product than many other items on the shopping list, according to a recent survey by Sanford Bernstein analyst Ali Dibadj. Just 10% of consumers said they switched to a cheaper diaper brand because "it's not worth paying more in this category," and no consumers reported switching baby food. By comparison, nearly a third of consumers said they switched brands of bleach, bottled water and liquid soap.