Commodities run-up sparks inflation worries -- and lost jobs at tire company

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You’re not going crazy: You really are starting to pay a bit more at the stores.

As commodity prices surge and the cost of raw materials grows, the price of everyday basics -– a cup of coffee, a box of cereal, a pack of men’s socks –- is slowly rising. And as the cost of making a product rises, someone –- the farmer, the manufacturer, the retailer or the consumer -– has to pay the price.

Just ask Robert Purcell. He’s the owner and chief executive of Purcell Tire & Rubber Co., a tire dealership in Potosi, Mo. According to the company’s website, Purcell is the third-largest independent commercial tire dealership in North America, the nation’s largest retreader for off-road tires and one of the 10 largest independent tire store chains in the United States.

Times have gotten tough for Robert’s business. Natural rubber future prices are definitely up, thanks to eager investors, increased demand from automakers and a tightening of supplies due to poor weather and landslides in top-producing country Thailand.

That, in turn, has meant that tire makers are charging him more for tires. “The supplier prices have gone up two, three, four times in the last few months,” Purcell said. “Each time, it’s another 5%, 10% more.”

So, too, have the materials his workers use to retread tires.

Purcell and his executive team have tried to pass on some of the costs to customers. But they’ve balked. “In some instances, they’ll get a set of two tires, instead of four,” Purcell said. “Or they’ll do without.”

Purcell said the economic squeeze has left him with little choice: The company has had to cut staff radically to survive.

“A year ago, we were at 1,200 employees. Now, we’re in the mid-700s. The cuts have been across the board, and I don’t see things getting better,” Purcell said.

To read more about what’s behind this run-up in commodities, and some of the ripple effects, check out this story.

-- P.J. Huffstutter