The Consumer Price Index Report was released yesterday, revealing that overall inflation has increased 5.4% over the past 12 months. Prices have particularly surged in all six major grocery store categories and the energy sector. Supply chain disruptions have caused major blockages, as well, causing surging prices in beef, poultry and eggs. A rapid decline in demand last year for airline travel has also caused oil production to slow and then pick back up when demand did.
According to the Department of Labor, here are the areas where prices have increased the most in major key categories:
- Rental cars: 42.9%
- Gas: 42.1%
- Used cars: 24.4%
- Hotels: 18%
- TVs: 12.7%
- Furniture: 11.2%
- Meats, poultry, fish and eggs: 10.5%
- New cars: 8.7%
- Appliances: 7.1%
- Electricity: 5.2%
- Restaurant prices: 4.7%
- Rent: 2.9%
A global computer chip supply shortage has caused the cost of rental cars to skyrocket, as new cars have globally not been available for production and, as a result, used cars have flooded the market. Car rental companies typically take new cars or cars that have completed one or two years of a lease to rent out to their customers. With car customers swooping up used cars, scarcity in the used car market caused prices to soar, more than any other category.
Gas prices are also shooting sharply upward. The unprecedented decline in demand for air travel caused the global price of oil to sharply decline during the pandemic, which caused OPEC nations to put a cap on their output. The sudden resurgence of demand left them unprepared for the new supply that would be needed, thus spiking the price. Levels climbed even higher as the Delta variant and slow global vaccination rates prevented full economic liftoff and regular demand. This led to OPEC’S decision not to increase output further, sending price levels even higher, up almost 42% for the year.
As food distributing plants have faced supply blockages, restaurant prices have also had to increase their prices, almost 5%.
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Last updated: October 14, 2021