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Debating Inflation

Will rising price levels be the next plague to hit Corporate America?

March 1, 2010

Just as the economy seems to be creeping back to health, a new study by McKinsey & Co. offers finance executives a fresh concern: inflation.

While various commodity prices have spiked over the past few years, the authors argue that low interest rates and high government spending could spark a rise in prices across the board. If the general price level were to increase by an extreme, albeit unlikely, amount — say, 10% to 15% — simply passing along rising costs to customers wouldn't keep a company in good health, say study co-authors Marc Goedhart, Timothy M. Koller, and David Wessels, all in the consulting firm's corporate finance practice. Read more...

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