NEW YORK--(BUSINESS WIRE)--Link to Fitch Ratings' Report: Inflationary Pressure (What North American Corporates Are Saying in Q2)
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'.