Jim Cramer Pushes For Strategic Price Cuts Among Companies Amid Inflation Worries: 'It May Be Time For A Giant Reset'

Jim Cramer has urged companies to reduce prices to attract consumers amid ongoing inflation concerns. He emphasized the need for a “giant reset” in pricing strategies.

What Happened: Cramer pointed out that while price increases have slowed, many businesses are hesitant to lower them due to worries about gross margins. He believes this reluctance is misguided and that companies must recognize the necessity for price reductions, CNBC reported on Wednesday.

"Companies are so reluctant to take prices down because they don't want to hurt their treasured gross margins," he said.

"But I think it may be time for a giant reset."

He cited examples, such as liquor companies attributing declining sales to changing consumer preferences rather than high costs. Cramer also mentioned Nike Inc. NKE, which reported a mixed quarter, as an example of how inflation is affecting business.

Cramer noted that consumers and Wall Street are favoring companies offering lower prices. He mentioned McDonald’s Corp. MCD extending its $5 value meal and noted stock gains for Amazon.com Inc. AMZN, Costco Wholesale Corp. COST, and Walmart Inc. WMT as evidence.

Cramer predicted that 2024 will be remembered as the year consumers rejected inflated prices, leading to significant consequences for companies that fail to adjust.

Why It Matters: The call for price reductions comes at a time when market sentiment remains cautious. Traders are in a “wait-and-watch” mode, anticipating key economic data, including non-farm payrolls. This cautious sentiment is compounded by geopolitical tensions and other economic factors.

Additionally, the S&P 500 recently reached record highs, with the Nasdaq 100 surpassing the 20,000-point mark. Despite these gains, the market has shown sideways performance as investors digest positive stimulus news from China and await further economic data.

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