From fruits to appliances to baby products and even the ingredients used to make our Cheetos, consumers are taking the hit everywhere they turn in higher prices at the grocery store, the restaurant, the department store, the electronics store, the rental car agency, and … you get the picture.
The culprit is found in the skyrocketing prices of commodities. Just what are commodities and why are they doing this to us? Unfortunately, commodities are basically the raw materials used in just about everything that is manufactured and will eventually find its way to a store shelf near you. Agricultural products like corn and wheat are also commodities, as are basics like water, minerals, and natural resources.
The price of commodities can fluctuate based on supply and demand. And in a post pandemic economy, the supply demand chain that suffered significant disruption during COVID – and remains disrupted to some extent – is manifesting itself in a domino effect of higher prices for everything and everyone.
It costs more to eat a meal out because restaurant owners are dealing with higher costs of ingredients. Food growers are paying higher expenses to truckers to transport their produce to wholesale and retail outlets. Fewer truckers are on the road because workers stayed home during the pandemic.
Factories that produce substances such as resin – vital in plastics and plywood and numerous other products – were halted or interrupted, and as a result, so were the production of the products which use that resin. Wholesalers and retailers pass the cost onto consumers to cover their higher expenses incurred in bringing you their goods or services.
After several years of enjoying low inflation, consumer prices jumped 2.6% in the year ended in March, according to the Labor Department – the biggest 12-month increase since August 2018. Price tags on processed meats, dishwashing products, lawn and garden items, and toiletries, have risen double digit percentages from just a year ago according to some indexes. The price of an apple is up anywhere from 10 to 20%. A graphics card that cost $400 in February, 2020, now sells for more than $1,000 on eBay.
Federal Reserve Chairman, Jerome Powell, said in April that inflationary pressures resulting from supply chain problems would likely be temporary. We hope he’s right. But if you’d like to know more about what’s going on with prices and how it’s affecting you, continue reading here: https://www.wsj.com/articles/consumers-adjust-to-higher-prices-11620552601?mod=business_lead_pos1