'What price do we charge?' US companies struggle to set prices amid high oil costs

American companies are struggling to set prices as soaring oil costs and tariff disputes drive up expenses. Recent inflation data showed prices rising at a still-rapid pace, but what is confounding businesses even more is a deeper question: whether the current high-cost environment is a temporary shock that will soon pass, or a structural shift that demands immediate price increases.

According to the Wall Street Journal on Saturday (local time), some companies are holding prices steady in the hope that cost pressures from external factors will soon ease. Others view the volatility driven by high oil prices and tariffs as a long-term reality and have moved to raise prices.

Melissa Florio, co-president of Ambix Manufacturing, which supplies plastic components to electrical power distribution companies, recently changed her thinking after resin prices — the company's key raw material — kept climbing alongside crude oil costs over the past several months. She had initially treated cost increases stemming from the war involving Iran as a temporary shock and held prices steady, but now sees them as a lasting source of cost pressure.

Ambix raised prices on all its products, including insulators for high-voltage transmission lines, by 10 to 21 percent this summer. "We reached a point where we simply could not absorb those costs any longer," Florio said.

Jim Barber, who runs a third-generation farm in Pennsylvania, is taking the opposite view. He sells beef, pork and milk, and while hay transportation costs have risen about 15 percent, he is keeping his prices unchanged, saying "everything will go back to normal once the situation in the Middle East stabilizes."

"I see the current rise in fuel costs as temporary," he said. "Once things settle down, prices will come back down."

Diane Swonk, chief economist at KPMG, said the nature of these disruptions has fundamentally changed. "In the past, shocks were intermittent — you could hold on and ride them out," she said. "Now they've become a constant."

Swonk said that in a recent conference call with industry economists, concerns emerged that if energy-driven inflation accelerates again, companies that have held prices steady will ultimately have no choice but to raise them.

Even so, some companies remain cautious about raising prices. Data analysis by human resources firm ADP found that more than a third of salaried workers experienced a decline in real purchasing power between late 2020 and late 2024.

Walmart said last month it had cut prices on more than 10,000 items even as it faced the prospect of enormous fuel costs. CEO John Furner said the retailer was expanding its market share while cutting prices "because customers need us."

But as uncertainty over the war and tariffs drags on, a growing number of companies have changed their stance. Soup maker Campbell's said as recently as June that it expected high costs to eventually ease and described price adjustments as a "last resort."

The company has since raised prices on more than half of its product lineup. Chief Financial Officer Todd Confer said the company had tried to cut costs in other ways, but that "it simply wasn't enough to absorb the extreme inflation."

Some companies still expect inflation to cool, but building a business plan around that assumption has become increasingly difficult. Gerald Commissiong, co-acting president of health tech firm Datameez AI, said, "We kept being told it would settle down soon — but in practice, it hasn't."