Warren Buffet sees substantial inflation among Berkshire Hathaway’s businesses

Buffet was accompanied by Berkshire Hathaway’s Vice Chairman Charlie Munger to the meeting.
Source: The CEO Magazine

Warren Buffet says that Berkshire Hathaway is going through inflation in its business collection as the economy’s bounce from pandemic booms into high gears. Buffet, the company’s CEO and chairman said that they are seeing substantial inflation.

“It’s very interesting. We are raising prices. People are raising prices to us and it’s being accepted. We’ve got nine homebuilders in addition to our manufacture housing and operation, 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’re going up,” said Buffet at the annual shareholder meeting held on Saturday.

Berkshire Hathaway is the owner of the nation’s prestigious home builders Clayton Homes, and other companies like Shah flooring and Benjamin Moore paints.

Inflation has been accelerating as a result of several factors like increased demand, and also finds it hard in some parts of the supply chain. The impact is also due to simple comparisons with the previous year’s results.

The core personal consumption expenditures price index shrank 1.8 percent in March, which is the quickest since February this year. This index is exclusive of the volatile energy and food costs. The headline number rose 2.3 percent, the fastest reach for this value since 2018.

Price hike pressures could impact stocks as inflation can erode the company’s profit values in the later stages, leading to a shoot in Treasury yields.

Jerome Powell, Chairman of Federal Reserve repeated in the previous week that he felt the inflation would show temporary highs and then come back near the central bank’s target of 2 percent.

Ahead of the annual meeting, Berkshire Hathaway released the results of its first quarter. The report read that the businesses’ conglomerate opening was nearly $7 billion, which is almost 20 percent more than the previous year.

Buffet was accompanied by Berkshire Hathaway’s Vice Chairman Charlie Munger to the meeting. The meeting began with Buffet’s presentation talking about 20 giant companies in the world. He was seen asking how many of these firms would remain on the same list after 30 years. He also cautioned budding investors about choosing great companies to invest in.

Later in the meeting, Buffet addressed his selling of some part of Apple’s stocks last year. He added that there was a chance to buy it but instead he sold some of the stock, which he now feels was a mistake. 

Buffet and Munger also spoke about modest interest rates and peak spending of the government. Munger said that he didn’t feel the extreme scenarios could be forever sustained. There was also a discussion on the recent corporate tax hikes announced by the Biden administration.

Both Munger and Buffet said that they are not stressed about these hikes and that the companies would get used to it. Moreover, there was criticism of bitcoin later in the meeting by Munger. The meeting ended with some last words from Buffet giving insights into next year’s meeting.

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Business & FinanceEconomy

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