Dollar Tree hikes prices 25%. Most items will cost $1.25

Dollar Tree will soon be $1.25 tree.

The company — one of America's last remaining true dollar stores — said Tuesday it will raise prices from $1 to $1.25 on the majority of its products by the first quarter of 2022. The change is a sign of the pressures low-cost retailers face holding down prices during a period of rising inflation.

Dollar Tree (DLTR) said in a quarterly earnings release Tuesday that its decision to raise prices to $1.25 permanently, however, was "not a reaction to short-term or transitory market conditions."