Warren Buffett at the Berkshire Hathaway Annual Meeting in Los Angeles, California. May 1, 2021.
Gerard Miller | CNBC
Warren Buffett is witnessing inflation amid Berkshire Hathaway’s corporate picking as the economic recovery from the Covid pandemic takes over.
“We are seeing very substantial inflation,” Berkshire’s chairman and CEO said at the conglomerate’s annual shareholder meeting on Saturday. “It is very interesting. We are raising the prices. People are raising the prices for us and it is accepted.”
“We have nine home builders in addition to our housing production and operations, which is the largest in the country. So we really do a lot of housing. The costs are just up, up, up. Steel costs, you know, just every day they increase, “added the legendary investor.
Berkshire Hathaway owns one of the nation’s largest Clayton Homes builders, along with companies such as Benjamin Moore Paints and Shaw Flooring.
Inflation has started to accelerate recently due to multiple factors, including increased demand and struggles with certain areas of the supply chain, as well as simpler comparisons to the pace a year ago. The leading consumer spending price index, which excludes volatile food and energy prices, rose 1.8% in March, the fastest pace since February 2020. The stock number increased by 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 and then stabilize around the central bank’s 2% target. The Fed has decided not to raise interest rates until the economy sees full and inclusive employment, as long as inflation is not too above target.
Higher price pressures could weigh on stocks as inflation erodes the value of future corporate profits and can cause Treasury yields to spike.
For a full summary of Buffett’s comments at the annual meeting, see here.
– CNBC’s Jeff Cox contributed to this article.
Did you like this article?
For exclusive stock selections, investment ideas and CNBC global live streaming
Subscribe to CNBC Pro
Start your free trial now