Peloton is hiking prices because of inflation

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.

Peloton says inflation and supply chain challenges have forced the company to hike the price of its flagship bike, just five months after cutting it drastically to boost sagging sales.Beginning Jan. 31, customers will be required to pay $250 for delivery and setup for Peloton's $1,495 bike �� a service that the company previously included in the price. Customers buying Peloton's Tread treadmills will be charged a $350 fee for delivery and installation starting later this month.With these fees, the price of the bike in the United States will jump to $1,745 and the Peloton Tread will soon cost $2,845. Peloton also said it will hike the base price of both pieces of equipment for customers in the United Kingdom, Germany and Australia, although it will continue to include delivery and setup for no extra charge.Peloton said in a statement that "continued constraints are driving up costs," a complaint echoed by companies across several industries."Like many other businesses, Peloton is being impacted by global economic and supply chain challenges that are affecting the majority, if not all, businesses worldwide," it said. "Even with these increases, we believe we still offer the best value in connected fitness, and offer consumers various financing options that make Peloton accessible to a wide audience."The $2,495 price of its higher-end Bike+ will remain the same and will continue to include delivery and setup at no extra charge.Peloton reduced the price of its bike by roughly 20% in August 2021 to jumpstart sales. It tried to keep up with the breakneck pace of 2020, when the company's products skyrocketed in popularity as gyms closed and people were forced to work out at home.But a massive Tread recall, gyms reopening and unfortunate cameo on HBO's "Sex and the City" sequel made Peloton's 2021 rougher than it had expected. Peloton revealed in its most recent earnings report that sales of its stationary bikes and treadmills fell 17%. Those two machines are the company's bread and butter, making up 60% of its business.Peloton shares fell nearly 3% in premarket trading and the stock is down 80% over the past year.

Peloton says inflation and supply chain challenges have forced the company to hike the price of its flagship bike, just five months after cutting it to boost sagging sales.

Beginning Jan. 31, customers will be required to pay $250 for delivery and setup for Peloton's $1,495 bike �� a service that the company previously included in the price. Customers buying Peloton's Tread treadmills will be charged a $350 fee for delivery and installation starting later this month.

With these fees, the price of the bike in the United States will jump to $1,745 and the Peloton Tread will soon cost $2,845. Peloton also said it will hike the base price of both pieces of equipment for customers in the United Kingdom, Germany and Australia, although it will continue to include delivery and setup for no extra charge.

Peloton said in a statement that "continued constraints are driving up costs," a across several industries.

"Like many other businesses, Peloton is being impacted by global economic and supply chain challenges that are affecting the majority, if not all, businesses worldwide," it said. "Even with these increases, we believe we still offer the best value in connected fitness, and offer consumers various financing options that make Peloton accessible to a wide audience."

Adam Glansman/Bloomberg/Getty Images

A Peloton bike pictured in Dedham, Massachusetts, on Feb. 3, 2021.

The $2,495 price of its higher-end Bike+ will remain the same and will continue to include delivery and setup at no extra charge.

Peloton reduced the price of its bike by roughly 20% in August 2021 to jumpstart sales. It tried to keep up with the breakneck pace of 2020, when the company's products skyrocketed in popularity as gyms closed and people were forced to work out at home.

But a massive Tread recall, gyms reopening and unfortunate cameo on HBO's "Sex and the City" sequel . Peloton revealed in its most recent earnings report that sales of its stationary bikes and treadmills fell 17%. Those two machines are the company's bread and butter, making up 60% of its business.

Peloton shares fell nearly 3% in premarket trading and the stock is down 80% over the past year.

��������

Peloton is hiking prices because of inflation

Share

Share

Share

Top Picks

��