American wallets are on fire.At consumer prices last month, Some policy makers are concerned that hyperinflation in the 1970s is imminent.
But that’s unlikely, most economists say. Indeed, today’s price increases are real. While all costs are rising, from sawmills to food and airfare, factories are reporting shortages of both materials and workers. However, many, if not all, experts say that these increases may be temporary, reflecting the rapid resumption of the economy as the pandemic declined rather than a long-term supply problem. It states that it has a high degree of sex.
“[T]”Don’t panic, not yet!” Said Albert Edwards, an analyst at Societe Generale, on Thursday. “Investor concerns about rising inflation will disappear.”
Resume “at once”
Most of the price increases in April and May were for expensive consumer goods such as automobiles, furniture and appliances. According to Capital Economics, more than half of the rise in commodity prices since January 2020 is in only three major categories: used cars, new cars and trucks, and furniture.
In part, these price increases are a function of timing. Most Americans,And tax refunds are readily available, including large purchases postponed during the pandemic.
However, in many cases, inventory is low and we are not waiting for a year’s worth of unsold items to be purchased. The factory was closed last year, sometimes for several months. With the surge in customer demand, manufacturers are struggling to produce and ship everything.
Zack Rogers, an assistant professor at Colorado State University’s Business College, said: Last year, “the demand for so many products was so low that not many were produced.”
“Everything turned on really fast,” he said, now that consumers are ready to use it.
What is pushing up car prices
Not only is consumer demand stagnant, but the price of automobiles is skyrocketing due to the continuing shortage of semiconductors that are essential for automobiles and trucks. COVID-19 delayed the production of these chips, most of them from Asia. Automakers such as GM and Ford have dialed back production accordingly, but Tesla has raised the price of the Model 3 by $ 2,500 since February.
“Prices are rising due to major supply chain price pressures across the industry,” CEO Elon Musk tweeted last month.
On the other hand, the deceleration of new cars rolling from the assembly lineInstead, it pushes the price of such vehicles to historically highs. v Since January 2020, used car and truck prices have skyrocketed by 29%. Rents are even higher, 62% above pre-pandemic levels.
Other raw materials used to make products are also becoming more expensive, further increasing the cost of finished products. Prices of aluminum, copper, steel and iron ore have all skyrocketed, and this week’s Standard & Poor’s Global Commodity Index hit a record high.
The strong consumer demand for automobiles extends to automobile parts and accessories. According to CEO Tony Uphoff, the business-to-business platform Thomasnet has tripled the number of searches for auto parts and accessories from a year ago.
“For many people, the energy is so high that it’s too closed, so we’re repairing the car and putting new tires on it,” he said.
Homes — and for homes — are also rising
In May, the household goods and business index grew at the fastest rate since the 1970s. This reflects the fierce competition for wood used to make everything from sofas and cabinets to frames for new homes. According to Jo Ann Arrant, head of J Furniture in Amory, Mississippi, some furniture makers are seeing a 30% increase in costs.
“I’ve been dealing with furniture for over 30 years and haven’t seen anything like this,” she told CBS News affiliate WCBI.
The highest timber price ever tripled from last yearRob Dietz, chief economist at the National Association of Home Builders, told CBS MoneyWatch for an average of $ 36,000 per home. For a new apartment, the price increase is about $ 13,000, which is equivalent to an additional rent of $ 120 per month.
Appliance costs have also risen, up 12% from May last year. Washing machine and dryer prices have risen 26% from a year ago, and major consumer electronics makers like Whirlpool have announced full price increases.
Soaring raw material prices and the shortage of semiconductors in automobiles are also affecting home appliances. This is exacerbated by delays in shipping finished products to their destinations.
“Insufficient supply of appliances — late or undeliverable,” Dietz said. “The microwave is inside the container and is waiting for its turn at the dock in Los Angeles, so the container is not loaded from the container ship.”
In March, NAHB reported that 90% of builders had problems getting appliances.
“There are shortages and shortages of appliances, timber, trusses, windows and doors, and in some cases nuts and bolts, whether they are expensive or time arriving,” Dietz added. I did.
Soaring food prices
Food is another category of spending that consumers may be in a pinch, primarily due to rising commodity costs. According to the Associated Press, corn, grain and soybean prices are at their highest levels since 2012. This means higher prices for grocery shelves and various consumer products.
Food prices haven’t risen at a spectacular rate for large consumer goods, but have risen 1.1% in the last four months due to rising costs of meat, bread and dairy products.
General Mills said it was considering raising the price of its products as grains, sugar and other ingredients became more expensive, AP said. Hormel Foods has raised the price of Skippy Peanut Butter. Coca-Cola warns of price increases to offset rising costs.And Procter & GambleDuring the summer.
Carmela Romanello Schaden, a real estate agent at Rockville Center in New York, told AP that her monthly meals had risen from $ 175 to $ 200 or $ 250 earlier this year.
For example, a strip steak package, which normally costs about $ 30, suddenly went to $ 45. She noticed an increase shortly before Memorial Day, but bought the item anyway because it was for a family picnic. But she wouldn’t do that and would trade down to pork and chicken instead, Scheden said.
“I was always selective,” she said. “When something goes up, I switch to another.”
Restaurants may soon make their own price increases. This week, Chipotle Mexican Grill announced that it will raise menu prices by about 4% to cover the cost of raising workers’ wages to an average of $ 15 per hour.
The Associated Press contributed to the report.
Consumer prices are rising.This is the one that is increasing the most — and why
Source link Consumer prices are rising.This is the one that is increasing the most — and why