With the bustling economy and low unemployment rate, the rise in US inflation is prompting companies to boost prices. As of 2018, the inflation rate is steadily approaching the Federal Reserve's 2% goal, a guideline created to ensure short-term interest rates were low. According to the Labor Department, the US consumer price inflation during January to September 2018 was 2.3%, while the annual wage growth reached 2.9 percent. Unfortunately, borrowing costs appear to be on the rise in 2019 to control for inflation in the wake of the US economy's steady growth facilitated by tax cuts. Companies across the US, however, are already sensing the decrease in profit revenue. Chief investment strategist Fritz Folts of 3EDGE Asset Management LP noted that "market participants are really concerned that maybe finally we have seen peak earnings and that people are talking much more about costs rising and, looking ahead, corporate profit margins could certainly come under pressure."

Many US companies have announced price increases, with Apple NASDAQ: AAPL) raising the prices on the Macbook Air and iPad Pro by 25 and 25%, respectively. Likewise, the burger chain McDonald's (MCD  ) has raised prices on burgers while manufacturing company Arconic Inc. (ARNC  ) is raising prices on rolled aluminum. Major airways including Delta Air Lines (DAL  ), Jet Blue Corp. (JBLU  ) and American Airlines Group (AAL  ) have announced higher ticket prices as a result of rising fuel costs. Airways, however, are not afraid of the effects on consumers. Delta CEO Ed Bastian declared "The economy is healthy. To the extent oil prices were to continue to rise, we expect to be able to pass along the cost of that." Other companies suggest that an increase in prices is necessary. Kellogg (K  ) CEO Steve Cahillan asserts that "the days of straight list-price increases are gone. It would lead to a decrease in consumer demand." In July, Kellogg's released a chocolate version of Eggo waffles priced at 12% higher than similar products.

Along with the inflation rate, the desire to increase prices on products emerges in the wake of the Trump Administration's imposition of tariffs. To date, aluminum and steel tariffs has caused Ford Motor Co. (F  ) to lose around $1 billion in profits. Other tariffs on raw materials have led companies to raise prices as well. Moving forward, possible factors that may alleviate the burden of international tariffs on companies is the strength of the dollar, which can lead to cheaper imports.

Nevertheless, companies propose that the success of the US economy so far will lead consumers to embrace higher prices. Jerry Storch, CEO of consultancy Storch Advisors, notes that companies "are finally able to take the price now because the economy is hot. Consumers have money and wages are finally up." On the other end of the spectrum, investors have been placing their faith and wallets into companies that respond to inflation appropriately. This year, companies that exhibit high operating leverage, or the ability to accrue revenue with little changes to their costs, have returned 13 percent.