Fitch: U.S. Corporates See Mild and Selective Inflationary Pressures for 2014
August 22 2014 - 12:02PM
Business Wire
Link to Fitch Ratings' Report: Inflationary Pressure (What North
American Corporates Are Saying in Q2)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=763728
U.S. corporates are reporting mild, although manageable,
inflationary pressures in 2014 that are mainly linked to certain
specific operating segments, according to a Fitch Ratings
report.
U.S. inflation remains muted, with the Consumer Price Index
(CPI) rising just 2.0% year-over-year as of July 2014 (1.9%
excluding food and energy). The 10-year Treasury note is also
subdued at 2.4%, even though some of this may be linked to investor
flight to safety given recent geopolitical tensions.
Overall, U.S. companies reported commodity inflation in
selective areas, including plastics, wood and fibers, and higher
domestic natural gas prices. However, companies in Fitch's sample
also reported other commodities price decreases. Key agricultural
crops, including corn, wheat and soybeans, experienced substantial
price declines driven by bumper crop yields in 1H 2014 and
carryover inventories from prior years.
The forward curves for a number of key commodities, including
oil, gasoline and copper, remain in backwardation -- future prices
lower than current spot prices -- indicating limited future
inflation expectations. Fitch also notes that activity linked to
the North American shale revolution is seeing pockets of
inflationary pressure on a play-by-play basis.
The full report 'Inflationary Pressure: What Corporates are
Saying in Q2' is available at 'www.fitchratings.com.' The report
provides summaries of public comments from 12 companies across
various U.S. corporate sectors.
Additional information is available at
'www.fitchratings.com'.
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Fitch Ratings, Inc.Mark C. Sadeghian, CFA, +1-312-368-2090Senior
DirectorFitch Ratings, Inc.70 West Madison StreetChicago, IL
60602orMedia RelationsBrian Bertsch,
+1-212-908-0549brian.bertsch@fitchratings.com