May 30 (Bloomberg) -- Eastman Kodak Co., the photography company reshaping itself in the digital age, said it will raise prices as much as 20 percent on products including paper, film and printing plates to counter higher raw material costs.

The prices take effect July 1 and will vary by product and region, the Rochester, New York-based company said in a statement today. The increase will help ease the effect of higher costs for silver, aluminum and oil, spokesman Chris Veronda said.

Chief Executive Officer Antonio Perez is trying to restore profit after a first-quarter loss. The increases hit products at the core of Kodak's historic business, which dates to 1884 and was built on the idea that photos were taken on film and printed on paper. Such products slipped to about 19 percent of sales last year as Kodak sold more digital cameras and inkjet printers to consumers who record life's events on pixels instead of paper.

``It makes sense financially that they need to raise prices,'' said Ron Glaz, program director with Framingham, Massachusetts-based research firm IDC. ``The entire world is facing situation where everything is costing more, especially anything to do with manufacturing.''

Higher food, fuel and metals prices helped boost U.S. consumer prices 3.9 percent in the year ended in April as companies tried to maintain profit margins. Dow Chemical Co., the largest U.S. chemical maker, said this week it will raise prices the most in its 111-year history. Caterpillar Inc., the world's largest maker of construction equipment, lifted prices to counter rising steel costs.

Kodak fell 19 cents to $15.32 at 4:15 p.m. in New York Stock Exchange composite trading. It has lost 30 percent this year.

U.S. Economy

The same forces hitting Kodak are buffeting the U.S. economy. U.S. consumer spending last quarter rose at the slowing pace since the 2001 recession as Americans encountered higher prices. During the six months ended in March, the U.S. expanded at the weakest pace in five years.

``Consumers are growing increasingly concerned about higher prices,'' Michele Meyer, an economist at Lehman Brothers Holdings Inc. in New York, said in a note to clients. ``The consumer faces an impressive set of headwinds.''

Kodak this month posted a $115 million first-quarter loss that was wider than analysts estimated because of higher material and research costs. The loss followed three straight quarters of profit as Perez completed a four-year program to shift the focus to digital products, including cameras and a new line of inkjet printers. Kodak has spent $3.4 billion to cut 28,000 jobs.

Sales of traditional film products fell 13 percent in the first quarter, and higher prices for silver, aluminum, plastics and resin added as much as $25 million to costs in the quarter.

Chief Financial Officer Frank Sklarsky said that a $1 increase in the price of silver costs Kodak an additional $20 million. Silver futures have jumped 14 percent this year on the Comex division of the New York Mercantile Exchange, reaching a high of $21.44 an ounce on March 17. The price of crude oil futures in New York rose by a third so far this year.

To contact the reporter on this story: Courtney Dentch in New York at cdentch1@bloomberg.net.

Last Updated: May 30, 2008 18:14 EDT