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PRICES AND TARIFF CONCERNS CREEPING UP

With no real signs of tariff clarity on the horizon, Phil Blancato, chief market strategist at Osaic Wealth, pointed to some concerning signs in a research note this week.

Blancato notes that in the five months since the tariff conversation began, Amazon has raised prices on necessity items like food, hygiene products, and household goods with the average price of a “low-cost” item listed on the ecommerce giant's website rising over 5% since Donald Trump took office as U.S. president.

The implication is that Amazon itself is raising prices "to either pre-empt potential tariff impacts, or pad margins" because multiple manufacturers of the items listed have denied charging more for their products, according to Blancato.

In contrast, he notes that Walmart has cut prices on similar goods by 2% in that timeframe. And in general, prices for imported goods are up about 2% since March, according to Harvard Business School’s Pricing Lab. This is "above the rate of inflation, but well below the increase in the effective tariff rate."

"This could be a bad sign for tariffs moving forward. If Amazon is increasing prices to pre-empt price fluctuations from tariffs, then consumers should expect a similar price increase from other retailers after August 1st and tariffs are here to stay," Blancato writes.

And he adds that rising prices could be "more painful for smaller companies because they are less likely to have pricing power with international suppliers."

So he notes that this "points broadly to tariff inflation coming in the months to follow, or a hit to domestic corporate earnings if other companies like Walmart decide to eat the tariffs."

(Sinéad Carew)

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)