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Home » Deflation's profit squeeze

Deflation's profit squeeze

By    Adam J.  Fein, Ph.D
June 10, 2003
More about:  Management/Strategy,  Operations
The crosshairs of deflationary product price trends and rising payroll costs are triggering an unprecedented gross profit squeeze for distributors who rely solely on margin mark-up pricing. Here's the evidence on deflation in the industrial economy, the profit impact of these trends, and three strategies for survival.


Last month, Federal Reserve Chairman Alan Greenspan startled financial markets by stating that the threat of deflation "though minor, is sufficiently large that it does require very close scrutiny and maybe ﾖ maybe ﾖ action on the part of the central bank."


Deflation ﾖ measured by a decline in product prices ﾖ is already a reality for many companies. Excluding the highly volatile food and energy industries, the overall Producer Price Index ﾖ measuring ...

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The crosshairs of deflationary product price trends and rising payroll costs are triggering an unprecedented gross profit squeeze for distributors who rely solely on margin mark-up pricing. Here's the evidence on deflation in the industrial economy, the profit impact of these trends, and three strategies for survival.


Last month, Federal Reserve Chairman Alan Greenspan startled financial markets by stating that the threat of deflation "though minor, is sufficiently large that it does require very close scrutiny and maybe ﾖ maybe ﾖ action on the part of the central bank."


Deflation ﾖ measured by a decline in product prices ﾖ is already a reality for many companies. Excluding the highly volatile food and energy industries, the overall Producer Price Index ﾖ measuring ...



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