Prepare to pay more: Starbucks is planning even more price hikes this year

Seven is often seen as a lucky number, but not this time. The consumer price index is up 7% in December from December 2020, that's the highest rate of annual increase in inflation in almost 40 years since June of 1982. Even core prices, if you exclude volatile items like food and energy, Even then still the fastest pace of increase in almost 31 years. And what today's report tells us, I think just validates what millions of households already knew and that is inflation is a problem. Prices are going up and they're going up pervasively and they're going up at a rate that outpaces growth and household income. In many cases, food prices are up over 6%. Energy prices up over 29 And shelter costs, which tend to lag already up over 4% year over a year. And I think that's the one to watch in the months ahead. The Federal Reserve had what I would describe as a very lazy faire attitude toward inflation in 2021 and only at the end of the year did they really get the memo that this is a problem. And as a result, we've seen them pivot very quickly in terms of how they view it and how they plan to address it specifically. We will see the Feds start to raise short term interest rates. They're likely to start that as soon as March and around that time or shortly thereafter, they will not only stop buying bonds and adding to their portfolio, they will start letting the size of that portfolio shrink, letting it run off. That has the effect of pulling liquidity out of the system. So even though that happens behind the scenes, I think that's arguably the more significant item. Both of those will slow the demand side of the economy over time, but they're not going to address nor fix the issues with the supply chain.

Starbucks has been hiking prices as inflation soars and labor costs rise. And it's planning more this year.The coffee chain raised its U.S. prices in October and again just last month in January, CEO Kevin Johnson noted during an analyst call Tuesday. He added that the company is planning even more price hikes this year."We have additional pricing actions planned through the balance of this year,' he said, adding that price increases "play an important role to mitigate cost pressures, including inflation." He later discussed rising labor costs.But the price hikes aren't scaring customers away from their mocha Fraps and vanilla lattes."With those pricing actions, we still saw incredibly strong demand through the holiday season," Johnson said.In the three months ended on Jan. 2, sales at Starbucks stores open at least 13 months jumped 13% globally and 18% in North America, driven partially by higher prices, the company said Tuesday."We have not seen any meaningful impact to customer demand," said John Culver, Starbucks chief operating officer. "To the contrary, our customer demand continues to grow."It's yet another example of U.S. prices rising across the board, hitting consumers' wallets and affecting companies' bottom lines. The U.S. consumer price index, a key inflation gauge, rose 7% last year, before seasonal adjustments, the Bureau of Labor Statistics reported. That was the biggest spike since June 1982, and it was higher than economists predicted.Like many other companies, in addition to inflation, Starbucks is also facing higher labor costs. Several major employers are increasing wages in a bid to entice applicants as businesses, particularly restaurants, have been struggling to hire from a shallow labor pool.Starbucks is no exception: The company said in October it would raise wages to at least $15 an hour for baristas, with most hourly employees earning an average of nearly $17 by the summer.Still, raising prices hasn't alleviated all of the pressure for Starbucks: Even with the hikes, the company reported earnings per share of $0.69 in the quarter, lower than Wall Street's expectations.Food prices are rising elsewhere, but customers seem similarly unfazedStarbucks is nowhere near alone in raising prices. Last year, restaurant prices rose 6%, the Bureau of Labor Statistics said in January.Customers have been tolerant of higher costs at other restaurants as well. Little Caesars recently raised the price of its signature Hot-N-Ready pizza, while Chipotle has hiked prices too.McDonald's increased menu prices by about 6% last year to help offset higher food, packaging and labor costs. But those price hikes didn't dissuade customers. In fact, sales at U.S. McDonald's stores open at least 13 months jumped 13.8%, last year, the largest annual increase since McDonald's started reporting comparable sales in 1993.CNN Business' Anneken Tappe contributed to this report.

Starbucks has been hiking prices as inflation soars and labor costs rise. And it's planning more this year.

The coffee chain raised its U.S. prices in October and again just last month in January, CEO Kevin Johnson noted during an analyst call Tuesday. He added that the company is planning even more price hikes this year.

"We have additional pricing actions planned through the balance of this year,' he said, adding that price increases "play an important role to mitigate cost pressures, including inflation." He later discussed rising labor costs.

But the price hikes aren't scaring customers away from their mocha Fraps and vanilla lattes.

"With those pricing actions, we still saw incredibly strong demand through the holiday season," Johnson said.

In the three months ended on Jan. 2, sales at Starbucks stores open at least 13 months jumped 13% globally and 18% in North America, driven partially by higher prices, the company said Tuesday.

"We have not seen any meaningful impact to customer demand," said John Culver, Starbucks chief operating officer. "To the contrary, our customer demand continues to grow."

It's yet another example of U.S. prices rising across the board, hitting consumers' wallets and affecting companies' bottom lines. The U.S. consumer price index, a key inflation gauge, rose 7% last year, before seasonal adjustments, the Bureau of Labor Statistics reported. That was the biggest spike since June 1982, and it was higher than economists predicted.

Like many other companies, in addition to inflation, Starbucks is also facing higher labor costs. Several major employers are increasing wages in a bid to entice applicants as businesses, particularly restaurants, have been struggling to hire from a shallow labor pool.

Starbucks is no exception: The company said in October it would raise wages to at least $15 an hour for baristas, with most hourly employees earning an average of nearly $17 by the summer.

Still, raising prices hasn't alleviated all of the pressure for Starbucks: Even with the hikes, the company reported earnings per share of $0.69 in the quarter, lower than Wall Street's expectations.

Food prices are rising elsewhere, but customers seem similarly unfazed

Starbucks is nowhere near alone in raising prices. Last year, restaurant prices rose 6%, the Bureau of Labor Statistics said in January.

Customers have been tolerant of higher costs at other restaurants as well. Little Caesars recently raised the price of its signature Hot-N-Ready pizza, while Chipotle has hiked prices too.

McDonald's increased menu prices by about 6% last year to help offset higher food, packaging and labor costs. But those price hikes didn't dissuade customers. In fact, sales at U.S. McDonald's stores open at least 13 months jumped 13.8%, last year, the largest annual increase since McDonald's started reporting comparable sales in 1993.

CNN Business' Anneken Tappe contributed to this report.

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