A friend pointed me to this interesting post, highlighting the potential for elevated commodity prices to lead to higher book prices as input costs (for distribution and paper production, primarily) rise. However, I do not agree with the subsequent analysis that:
To date, producer price increases have been running ahead of price increases at the consumer level. But as our current unpleasant experience with retail food and energy prices demonstrates, this won’t last long.
The price of crude oil has doubled, give or take, over the last year, and while gasoline prices are up only about 20 percent. Pretty much the same story has been true for food, with wheat prices doubling recently, but wheat bread prices, for example, increasing much less rapidly.
Ultimately, it just depends on the elasticity of demand, as the airlines have learned all too painfully of late. That is, if people are not willing to pay more for books, retailers will have no choice but to keep them flat, which could mean smaller profit margins, or even no profit margins at all (perhaps forcing industry consolidation). But it hardly is a foregone conclusion that if wholesale prices increase, consumer prices eventually will rise by a commensurate amount. Sometimes substitutes (Kindle, anyone?) get in the way.
