Caterpillar Plans Smallest Price Increase Since 2006

 

The 2008 plan for price boosts of as much as 5 percent for machines and 6 percent for engines was augmented by another midyear increase. The planned 2009 increase was as much as 7 percent, but has since been lowered to 2 percent.
Courtesy of Caterpillar

Caterpillar Inc., the world’s largest maker of construction equipment, plans to raise prices on most machines worldwide by as much as 2 percent, its smallest increase since at least 2006.

The new prices, from zero to 2 percent, take effect in January 2010, the company announced. Caterpillar cited current industry factors and current and expected general economic conditions.

Chief Executive Officer Jim Owens’ planned increase is lower than the past three years, when prices climbed as much as 7 percent, according to Caterpillar. The U.S. is in a recession and faces the possibility of deflation, or a decline in prices, for the first time since the 1950s-era Eisenhower administration.

“This is disinflation, they are raising prices but at a much slower rate, and I think that’s what’s happening economywide,” said Mark Zandi, chief economist at Moody’s Economy.com. “The actual rate of inflation now is low and given how tough the economic environment is, the potential for outright declines in wages and prices is high.”

– Courtesy of Blomberg News