You have been living under a rock if you haven’t experienced the variety of supply shortages that have come and gone since the pandemic, but now there are new words that are striking fear in holiday shoppers…. supply chain and inflation! Hold on to your Santa Hats guys this year is going to get pricey!
What’s Going On With the Supply Chain and Inflation?
The COVID-19 pandemic. A shutdown economy. Fewer workers. Higher prices.
At the moment, we’ve got the perfect storm of global supply chain issues: Cargo ships (and the items they’re carrying) are stuck in port. There aren’t enough workers to unload those items, if the ships can even reach port). The rising costs of shipping being dumped onto the consumer. Oh, and let’s not forget about one more thing: inflation.
This whole port issue can be summed up like this: Shipping containers aren’t able to unload, and that’s causing major bottlenecks at the ports. Some ships are waiting to load up their cargo, some are waiting to unload their stuff, and others just can’t do either one because they don’t have enough workers to do it. It’s a real domino effect, that’s for sure. Then add the truck driver shortage and the swamped warehouses and you can bet things are just not moving.
Of course, these issues at the port are impacting shipping too. First of all, the global cost to ship a 40-foot container averages around $10,359—that’s a 364% price jump from this time last year. You can expect that rise in shipping costs to effect the price tag you see on items once they reach the store.
The silver lining here? This is a great reason to go out and support your local businesses. You won’t have to wait on shipping (if the item is in the store), and the chances are, that small business is buying items from other small businesses in your local area. Boom. The best way to beat the shipping problem? Don’t even bother with it.
What Does Inflation Impact?
Inflation happens when the prices of things go up but the purchasing power goes down. And here’s the crazy thing about inflation—it affects everything. EVERYTHING.
Christmas 2021 is expected to have the highest holiday retail sales on record, with Americans projected to spend somewhere in the ballpark of $850 billion.
So, why does inflation impact the price of gifts? Well, thanks to inflation, the price to make goods has gone up. And because of that, manufacturers are passing that cost right along to you. Merry Christmas.
Everyone has noticed food prices going up and up these last few months—and that’s not going to change before Christmas. As of September 2021, the inflation rate in the U.S. has risen to 5.4% over the previous 12 months—that’s up 0.4% from August’s numbers.
So, when you’re making your holiday meals, be prepared for the price of food to be more expensive this year. And that’s if you can even find the food you need. Stores are already having a hard time keeping things like canned pumpkin, cranberry sauce, hams and pies stocked. Yikes. Your best bet here is to shop early, but don’t fall into panic buying.
Know what else inflation impacts? Energy costs. Yep, that means it’s probably going to cost more to keep your home cozy this winter—especially since energy prices jumped more than 80% in 2021. Keeping your heating costs down will go a long way to help you steer clear of a massive bill this winter.
If you’ve filled up your gas tank this year, you’ve without a doubt noticed some pain at the pump. That’s because inflation has made the price of gasoline jump too. The average price for a regular gallon of gas is $3.40—that’s a hike from this time last year when the average price was $2.13.
We as a people are resilient and find creative ways to get to where we need or want to be. Maybe Christmas looks a little different this year. Maybe we go easy on the gift giving and spend more time together. Maybe we use our skills to make things or create an experience for our families. Just remember to roll with it and remember the reason for the season!
This commentary was originally posted November 10, 2021 by Ramsey Solutions.
**Disclaimer: This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.