Inflation may be more elevated than what the official numbers indicate, according to Procter & Gamble Company's (P&G) fiscal year 2024 first-quarter earnings report.

It seems American consumers are paying more for essential goods ranging from healthcare to home care in a resilient U.S economy.

The Cincinnati-based consumer products giant -- a barometer for the basic consumer goods economy -- delivered another solid quarter of financial results this week, following generous price hikes across its product portfolio.

Virtually every division -- Grooming (9% hike), Beauty (7%), Health Care (6%), Fabric & Home Care (6%), and Baby, Feminine & Family Care (8%) -- saw significant price increases.

These price hikes exceed the recent headline and core consumer inflation. For instance, the September headline Consumer Price Index (CPI) increased at an annual rate of 3.7%, while core CPI, which excludes volatile food and energy prices, grew at an annual rate of 4.1%.

"Inflation remains, and it is more prevalent than the government is telling us (which should surprise no one)," Rod Skyles, The Unconventional Economist," told International Business Times.

"It also indicates that huge companies like P&G that have pricing power will use that power to pad earnings while consumer spending remains resilient and could extend inflation until consumers say 'enough' by buying less."

Price hikes helped P&G give a boost to its top and bottom lines. First fiscal year 2024 quarter sales came at $21.9 billion, a 6% gain over the prior year. In addition, earnings per share came to $1.83, a 17% gain from the previous year.

Jon Moeller, Chairman of the Board, President, and Chief Executive Officer cheered the company's financial results.

"We delivered very strong results in the first quarter of fiscal year 2024, putting us on track to deliver towards the higher end of our fiscal year guidance ranges for organic sales and core EPS growth," he said in a press statement.

Wall Street also liked what it saw in P&G's financial numbers, sending its shares sharply higher on Wednesday, in a down day for the rest of the equity market.

P&G's solid financial performance is a story of brand strength for must-have products and a resilient economy driven by robust consumer demand.

"P&G has been able to raise prices as a result of both its pricing power on its well-established brands that are perceived to be of high quality, as well as the financial strength of consumers," David I Kass, a finance professor at the University of Maryland's Robert H. Smith School of Business, told IBT.

"As a result of the recent monetary and fiscal stimulus in response to the pandemic. Consumers with higher than average incomes have been relatively price insensitive and generally have had an inelastic demand for household goods."

Kass doesn't expect the tailwind from robust spending to continue, as consumers run out of accumulated savings and the government stimulus programs are depleted. "Consumers are likely to become more price sensitive, which should lead to the substitution of lower cost goods and, therefore, a reduction in goods inflation," he added.

Melissa Cid, consumer savings expert for MySavings.com, agrees, pointing to a volume decline in the company's sales. In addition, she doesn't see the higher prices staying that way either.

"While some consumers absorb these higher costs just fine, others are struggling with the constant onslaught of rising prices," she added. "Saving money is more important now than ever. Loyal P&G shoppers seek additional ways to save money on their favorite products with coupons, rebate apps, or waiting for sale. Consumers who can't bring the price down find alternative products and store brands more appealing than ever."

Skyles thinks that this search for alternative products may already be happening, hurting volume sales. "Looking at the earnings report, one will notice that volumes are down across the vast divisions of P&G --down a total of 1% overall," he added. "It may indicate that consumers are in the early stages of looking to bargain items, which is a bit closer to crying 'Uncle!' on price hikes."

Meanwhile, he thinks P&G's earnings after significant price increases could embolden other companies to do the same, pushing inflation higher and for a longer period.

"It's something to pay attention to in how the consumer and the financial markets react," Skyles added.

Inflation