Warren Buffett says Berkshire Hathaway is experiencing ‘very substantial inflation’, raising prices

Warren Buffett says Berkshire Hathaway is experiencing ‘very substantial inflation’, raising prices

Warren Buffett at the Berkshire Hathaway Annual Meeting in Los Angeles, California. May 1, 2021.

Gerard Miller | CNBC

Warren Buffett sees inflation among Berkshire Hathawaythe set of companies as the economic recovery of the Covid pandemic shift into high gear.

“We are seeing very substantial inflation,” Berkshire’s chief executive officer said at the conglomerate’s annual shareholders meeting on Saturday. “It’s very interesting. We are raising the prices. People are raising the prices to us and it is accepted.”

“We have nine home builders in addition to our manufacturing homes and operations, which are the largest in the country. So we are building a lot of housing. Costs are just up, up, up. The costs of steel, you know, just every day they go up, ”added the legendary investor.

Berkshire Hathaway owns one of the nation’s largest home builders, Clayton Homes, as well as companies such as Benjamin Moore Paints and Shaw Flooring.

Inflation has started to accelerate recently due to multiple factors, including growing demand and difficulties with certain areas of the supply chain, as well as easier comparisons to the pace of a year ago. The basic personal consumption expenditure price index, which excludes volatile food and energy prices, rose 1.8% in March, the fastest pace since February 2020. The overall figure increased of 2.3%, the fastest pace for this measure since 2018.

Federal Reserve Chairman Jerome Powell reiterated last week that he expects inflation to show a temporary upward movement, then recover to around the central bank’s 2% target . The Fed has decided not to raise interest rates until the economy sees full inclusive employment, as long as inflation does not exceed the target too much.

Higher price pressures could weigh on equities as inflation erodes the value of future corporate profits and can cause Treasury bill yields to rise.

For a full recap of Buffett’s comments at the annual meeting, see here.

– CNBC’s Jeff Cox contributed to this article.

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