In line with Warren Buffett, Berkshire Hathaway is seeing “very important inflation” and rising costs

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

Gerard Miller | CNBC

Warren Buffett sees inflation in Berkshire Hathaway’s corporate collection as economic recovery from the Covid pandemic takes off.

“We’re seeing very significant inflation,” said the Berkshire chairman and CEO at the conglomerate’s annual general meeting on Saturday. “It’s very interesting. We’re raising prices. People are raising prices for us and it’s accepted.”

“We have nine home builders in addition to our manufacturing houses and operations, which are the largest in the country. So we really do a lot of housing. The cost is just high, high, high. Steel costs, you know, it just goes up every day,” added the legendary investor added.

Berkshire Hathaway owns one of the country’s largest home builders, Clayton Homes, as well as companies like Benjamin Moore Paint and Shaw Flooring.

Inflation has been increasing recently due to several factors including increasing demand and problems with some areas of the supply chain, as well as easier comparisons with the pace a year ago. The core consumer spending price index, which excludes volatile food and energy prices, rose 1.8% in March, the fastest pace since February 2020. Headline count rose 2.3%, the fastest pace for that measure since 2018.

Federal Reserve Chairman Jerome Powell reiterated last week that he anticipates inflation to rise temporarily higher than refocusing on 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 is not too far above target.

Increased price pressures could weigh on stocks as inflation undermines the value of future corporate earnings and can lead to higher government bond yields.

A full recap of Buffett’s comments at the annual meeting can be found here.

– CNBC’s Jeff Cox contributed to this article.

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