Musk says Tesla, SpaceX are facing inflation lift-off

Billionaire Elon Musk also says it’s better to own a home or stock in companies during high inflation, adding ‘I won’t sell my bitcoin, ethereum or doge’.

Elon Musk says his companies are ‘seeing significant recent inflation pressure’. Above, Mr Musk at the construction site for a new Tesla plant in Germany. Picture: dpa / AFP

Elon Musk says his two companies, Tesla and SpaceX, are facing substantial inflationary pressure and that he has no plans to sell his cryptocurrency holdings.

Mr Musk, the world’s richest person by net worth, said in a tweet on Sunday that both the electrical-vehicle maker and the space-­exploration company were “seeing significant recent inflation pressure in raw materials and logistics”.

His comments come after government data released last week showed consumer prices jumped at a 7.9 per cent annual rate last month, the highest in four decades. A separate poll by The Wall Street Journal showed non-white voters were more likely to say the recent inflation is causing a big ­financial strain on their lives.

“As a general principle, for those looking for advice from this thread, it is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high,” Mr Musk said on Twitter.

“I still own & won’t sell my bitcoin, ethereum or doge fwiw [for what it’s worth].”

The price of bitcoin was ­recently trading at about $US39,000, according to CoinDesk. It is down by roughly half from its all-time high reached in November.

Mr Musk’s net worth is $US206bn ($287bn), according to the Bloomberg Billionaires Index.

Mr Musk’s comments on inflation come as rising energy, food and services prices are the key components driving inflation higher. Oil and commodity market disruptions from the Ukraine crisis are expected to add more cost pressures in the coming months. The last time consumer prices were this high was in January 1982 during a recession.

In one of his tweets, Mr Musk asked his 77.7 million followers what their thoughts were about the probable inflation rate over the next few years. Inflation expectations are important because how people perceive future price moves can play a role in actual inflation and determining how and when the Federal Reserve raises interest rates.

A report released on Monday showed households in February expect 6 per cent inflation a year from now, a record and up from 5.8 per cent in January, according to the Federal Reserve Bank of New York. “The increase was widespread across age, education and income groups, but largest for the respondents without a high-school diploma,” the bank said.

Inflation is being felt from consumers to businesses. More than 350 companies in the S&P 500 cited inflation during their earnings calls for the latest quarter, ­according to financial-data provider FactSet, the most since at least 2010.

Mr Musk’s comments echoed Tesla’s recent results as well. The company said higher logistics costs and materials prices weighed on profit last year.

Other companies have been feeling similar pressures, from cool drinks maker Coca-Cola Co to consumer products company Procter & Gamble.

“Inflationary and supply chain pressures continue to impact costs across several fronts in the business, including input costs, transportation, marketing and operating expenses,” Coca-Cola chief financial officer John Murphy told analysts on the company’s fourth-quarter earnings call last month.

P&G, the maker of Pampers nappies and Tide laundry detergent, said it expected inflationary pressure to continue.

“Availability of materials remain stretched in some categories and in some markets, inflationary pressures are broadbased with ­little sign of near term relief,” Andre Schulten, chief financial ­officer at P&G, said on the company’s second-quarter earnings call in January.

The Wall Street Journal