As the economy slowly revives, companies face a new threat: rising commodity prices that could pressure corporate cash flows and margins. According to a recent study by Fitch Ratings, the industries that are likely to feel the biggest pinch are airlines, ethanol producers, and livestock and poultry processors, with packaged-goods companies and retailers also likely to feel some pain.
Fitch argues that the Federal Reserve's stimulus, federal tax policies and the exuberant growth in emerging markets like China and Brazil are all reinforcing the increases in commodity prices.
Given the improvement in the economy, companies are in a better position to pass on higher costs to their customers than they were the last time commodity prices headed higher in 2008, Fitch says.
Recommended For You
On the other hand, the rating agency notes that companies did a lot of restructuring during the recession, which leaves them little excess capacity to cut if commodity prices start to sting.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
