McDonald's plans to raise prices

McDonald's Corp. plans to raise menu prices to blunt higher costs, including what would be its first such increase in the U.S. in more than a year—a time when the burger chain's sales have thrived amid lower prices.

The company expects to increase prices in the U.S. and Europe amid projections that commodity costs will rise between 2% and 3% in 2011, Chief Financial Officer Peter Bensen said Thursday during a conference call after McDonald's reported a 10% increase in third-quarter earnings and added that October sales appear strong.

Timing and executing price increases can be tricky as McDonald's and other companies are caught between paying more for key materials such as meat and wheat, and keeping prices low to attract price-sensitive customers in a still-weak economy. McDonald's says it has the pricing power to pass on some of those costs.