“Inflation” is a new buzzword being used in headlines, titles, and broadcasts all over media platforms. The reason is simple – we are at the early stages of an inflationary economic time unlike that which many that are alive today has ever seen. It’s just the beginning.
By the end of 2021, I predict we will bypass 30 trillion dollars of Federal Debt.
From Reuters…….
“U.S. consumer prices rose by the most in more than 8-1/2 years in March as increased vaccinations and massive fiscal stimulus unleashed pent-up demand, kicking off what most economists expect will be a brief period of higher inflation.”
“The report from the Labor Department on Tuesday also showed a firming in underlying prices last month as the broader reopening of the economy bumps against bottlenecks in the supply chain, capacity constraints, and higher commodity prices.”
“Federal Reserve Chair Jerome Powell and many economists view higher inflation as transitory, with supply chains expected to adapt and become more efficient. The supply constraints mostly reflect a shift in demand towards goods and away from services during the pandemic, now in its second year.”
Food and beverage manufacturers such as Coca-Cola are announcing price increases as raw material costs continue to rise. Toilet paper and diapers have markedly increased. Food prices continue to rise. Government typically downplays situations in which they have a role and responsibility as long as it benefits them. In this case, they are certainly not denying that inflation is occurring, however, to the extent to which it will affect the majority of the population is being diminished.
Beyond inflation, there are supply chain issues. Many companies are having difficulty obtaining the necessary ingredients to manufacture their products. Electric vehicles and similar tech industries have a chip shortage. Severe downtime is being experienced through manufacturers as they cannot find workers due to their workforce being paid to stay at home(unemployment + Federal COVID stipends). Over the last several week’s numerous industries which have a foundation in plastics are struggling to obtain raw materials.
Many suppliers are sending out letters to customers warning that orders are being allocated and price increases are scheduled. For those who do not know what “allocation” is – allocation is the dividing up of available supply to those placing orders to give some to most – but not in the quantity ordered.
An example of allocation would be toilet paper. “Fred’s Grocery Store” orders 50 cases of Angel Soft TP. The distributor receives Fred’s order as well as every other business but does not have enough inventory to fill all orders. The distributor decides that everyone will receive 20% of their order – or allocates to a level of 20%. Fred’s Grocery Store receives 10 cases instead of 50.
Guess what Fred does? He raises the price and limits customers to buy one pack of Angle Soft per day.
Over the coming months, inflation will continue to increase. Income will remain constant will prices inflate. Supply will decrease, demand increase, and costs increase. This vicious cycle will remain unless an economic correction is implemented.
This is not likely the case.
My recommendation is to make a list of those items you buy on a regular basis and stock up now. Spending $500 on household items may save you 10%-25% later. Maybe more. If there is a big project planned, buying those supplies now will save money later. Food is a required tangible that can be purchased now and make dollars go further.
Here is a quick list:
- Canned Goods
- Toilet Paper
- Cleaning Supplies
- Shampoo/Conditioner
- Toothpaste
- Meats and Other Frozen Items
- Seasonings
- Paper Towels
- Towels and Similar Items
- Clothes
- Butter and similar condiments used daily that will keep upwards of a year or more
- Bottled water
- Trash bags
- ….and all items used daily, weekly that are shelf-stable
Every penny counts and throwing a few extra bottles of A1 Steak Sauce – especially if bought on sale – may save a few bucks. Doing that over and over again with different items adds up.
“Shrinkflation” is also occurring. Companies are shrinking the size of their product and frequently selling for the same price or even hire as a means to maintain profit. This has been going on for years and is ramping up now. Costco recently did this with their paper towels. They lowered the number of sheets by 8.75% – thus customers were hit with what amounts to an 8.75% inflation rate on these towels.
What are you seeing in your neck of the woods? Price increases? Changing of packaging? Empty shelves?
Take care all. 2020 is over but 2021 and beyond are going to present their own unique set of challenges.
Rourke
Something I didn’t think about until the shelves were empty last year is that when they’re out of my usual brands, I have to buy the more expensive ones that are available, if it’s something I really need. For a few weeks, I was spending twice as much on half as many items. It was a very painful lesson to learn.
Where I am seeing the pinch is in my work. I repair alternators and starters as part of my livelyhood . The parts stream is getting thin and prices have gone up.
The economic times are good for this type of business . It is not uncommon for me to take a unit that is $160 at the parts house and repair it for $30 with a $5 part and 20 min. of labor.
One of the things that happen with inflation, is the cost of borrowing money goes up. I saw this coming with the election so I did my construction and well contracts soon after, with no expiration date or a longer expiry date. Well, Shop, Conex’s for storage and equipment. I am not new at all to emergency preparedness. Of course this allows the big boys to profit in a windfall fashion. A hallmark of this administration.
We do not plan to use up stores because they cost less that current products, but it does give us a buffer to watch ad things come in and out of availability.
you will see a flight to safety in the markets. Whether metal or coffee.. it will force the prices up on “assets”, as well as money.
They think it will be “transitory” and do not define a time frame with that. I’d call it post 2024 if we last that long before international markets pull the plug. And then only if we change administrations. Fair elections may be a thing of the past IMO. The whole exercise is designed to drain the US economy and weaken it’s ability to resist coercion. count on it. It’s much worse than simple ignorance and mismanagement.
GG58
As usual, goinggray58 has nailed it. Inflation? We’ve had this going on for years. Not sure when it started but I’ll bet Obama administration. The packaging in the stores are the tell tale. Something as simple as Ritz Crackers. You now have the “Family size”. The stacks of crackers are shorter and when you really examine the package, you don’t have any more than you used to get in the large package of a couple of years ago. Just about everything in the grocery store has been sized down. Some canned goods are the same size and still contain the same liquid weight. But, the solid weight such as beans, has been made up with water. Less beans, same price, inflation. Tuna has less in the can today and the “packed in water” is no joke.
I’ve gotten in my TP and PT products. Now concentrating on cleaning products. Still having a major issue with the wife to get her to believe what is coming. Oh well, I’ll get it anyway. I’m really fortunate to have a wife that doesn’t throw temper tantrums, God bless her.
BTW, went shopping yesterday. Took my nephew with me. (52 year old, 6′ 3″,cerebral palsy and developed to about 10 – 15 years old). I took a moment to run thru the men’s clothing. EVERYTHING is going up. Shirts have jumped the most. Guess we could start making our own.
We are trying to top off our food supplies as much as possible by stocking up canned
vegetables,pasta,rice and instant potatoes. The high carbohydrate staples are still
available and reasonably priced for now. If we can store the basics now maybe we can
afford meat and a few luxury foods when we are in the hyper inflation mode.
All of the factors that are having a negative effect on prices overall are beyond our
control. All we can do is pull up our big boys and get busy preparing every day for what is coming.
Oren Player is correct when saying that we could and should make things for ourselves. It was that way for many years.
Here’s something else to add to the list. SHOES and BOOTS. These could easily become scarce.
We have been thinking about items for barter and charity for a number of years now.
Kids shoes and snow boots are dirt cheap at the thrift stores so we have already helped a neighbor family with seven kiddos. When the collapse hits it’s doubtful that
folks will be too proud to take used or hand me downs of anything.
gg58 and Oren, you guys and John are correct, went into Aldi’s the other day to pick up some things and they are limiting certain can goods as manufactures are having trouble getting raw ingredients. If you local Morman church has a pantry that sells dehydrated can goods to the public check it out.