Inflation, Consumer Prices, and the Cost of New Shoes
You do not have to be a rocket scientist to understand that the current rate of inflation in most developed countries is as bad as it has been in 30 to 40 years. Thanks to the COVID pandemic and its ultimate fallout, consumer prices are up everywhere. We are now paying more for everything from groceries to gasoline and clothing to household items.
Here in the U.S., economists and CEOs are warning of possible double-digit inflation through the end of the year. Things are not much better in the UK, where inflation exceeded 5% in 2021. Increased inflation in January was linked directly to higher costs for shoes and clothing.
So what’s the deal? What is causing consumer prices to rise so quickly to the point of outpacing wages?
A Complicated Recipe
There isn’t just one thing that drives inflation. National economies are driven by a complicated recipe of factors that are all capable of changing very quickly. For instance, recent tensions between Russia and Ukraine have caused a spike in crude oil prices. Already high prices at the gas pump will push still higher as a result.
The fuel issue raises one of the finer points about inflation too few people realize. When government measures inflation, they are looking at the total package. They are looking at what people spend compared to what they make. Spending covers everything from basic necessities to luxury items.
Practically speaking, a significant jump in basics like fuel and food could result in a higher inflation rate even if prices on other items dropped. The point is that price increases in just one consumer category can lead to a higher inflation rate. That’s why governments are so specific about pointing out certain items, like clothing and shoes, that demonstrate price spikes.
Fallout from the Pandemic
Current inflationary pressures are being blamed on the fallout from the pandemic. For starters, production dried up from early 2020 through most of the end of that year. Manufacturing reserves were stretched to their limits as a result. Now, even with manufacturing almost back to normal, there isn’t enough supply to keep up with demand.
The result is that the companies responsible for producing the goods and services consumers want to spend more money to do so. They pass their higher costs on to customers who ultimately pay for it at retail. Of course, the labor issue cannot be ignored either.
What is being termed as the ‘Great Resignation’ is making it difficult for companies to retain enough staff to get the work done. They are having to spend more money on wages and benefits just to keep the doors open. Unfortunately, the higher cost of labor is also passed on to customers through higher retail prices.
It’s Time to Be Thrifty
Times of high inflation are also times to practice thriftiness. If you are not normally a thrifty person, you may have to turn over a new leaf – at least in the short term. Are you planning to buy a new pair of shoes? Be sure that price is commensurate with quality and protect your new shoes with a pair of waterproof shoe covers for a manufacturer like GC Tech. You will save money in the long run.
When it comes to everyday items like food and fuel, you may have to learn to do with less. You can cook more at home and stop driving the car unnecessarily. Unfortunately, inflation is here in a big way. It is something we are going to have to work through over the next 12 to 18 months.