Americans are likely to experience some sticker shock as prices for key products spike due to rising demand and supply chain snags.
The Wall Street Journal recently cited leaders from companies like Clorox, General Mills, and Whirlpool sounding the alarm on price spikes for products like breakfast cereal, trash bags, and household appliances. Reasons for rising prices run from pent-up demand due to rising vaccination rates, pandemic-related delays, manufacturing issues around key components like computer chips, and logistical tangles.
The Consumer Price Index spiked 0.8% in April, signalling a 4.2% year-over-year surge in prices. That means that Americans could feel a pinch when paying for meats like bacon and hot dogs, imported foods like cheese and wine, and fuel – also thanks in part to a cyberattack on the Colonial Pipeline in the southeast.
And skyrocketing prices are affecting a number of aspects of consumer’s lives, outside of trips to the grocery store and the gas station. Used cars and trucks saw a record-breaking 10% price jump in April, partly due to an increased demand and a computer chip shortage. The red-hot home market has seen significant price surges, with a year over year increase of 11.3% in March. That’s been tied to a massive increase in lumber prices, which are around 85% year-to-date.
But so far, the Federal Reserve has declined to introduce new policy around inflation. Speaking at a press conference in late April, Federal Reserve Chairman Jerome Powell said that inflation readings “are likely to rise somewhat further before moderating.”
“We are also likely to see upward pressure on prices from the rebound in spending as the economy continues to reopen, particularly if supply bottlenecks limit how quickly production can respond in the near term,” he said. “However, these one-time increases in prices are likely to have only transitory effects on inflation.”
Wharton professor Jeremy Siegel accused Powell of being far too “dovish” on inflation.
“I’m predicting here that over the next two, three years we could easily have 20% inflation,” he said on CNBC.
*story by Business Insider