On a recent quarterly earnings call, Costco CFO Richard Galanti stated that “inflation pressures abound.” The selling price for everyday staples like paper goods, meat, cheese, and trash bags are all up at the cash register. Galanti further added that “items shipped across the ocean” have seen “suppliers paying up to double for containers and shipping.”
A post-pandemic wardrobe refresh of your closet could also become more expensive; Galanti said that certain apparel items are up 3% to 10%. Computer chips, oils, and chemical supplies could see spikes, thanks to product shortages. Paper products could cut into budgets, as rising pulp prices send prices surging 4% to 8%. Meat is increasingly expensive, rising 7% year over year. Meat lovers could get hit with a 20% surge for certain beef products in the last month, according to Galanti.
So, what is driving up consumer prices so rapidly?
Our analysis leads us to point to multiple, obvious culprits.
- Excessive federal government spending always leads to inflation according to most economists. Printing cash always has its consequences.
- New presidential / administration regulations. For example, gasoline prices are up one dollar per gallon with the shutdown of the Keystone pipeline by the Biden administration. This forces America to be more reliant on foreign oil.
- The threat of rising taxes and fees at the federal, state, and local levels.
- China! For example, China bought up 5.44 million tons of the world’s rubber supplies in 2020. This has led to massive shortages of tires and other rubber-based products in the United States. American automobile manufacturers are trying to cope with the major supply chain disruptions and its painful for consumers who ultimately bear the cost.
- Labor force shortages are driving up wages which in-turn leads to inflation of virtually everything.
- Pent up consumer demand as consumers wait for items to return to sale after being put on long wait lists or backorders.
- Logistics / supply chain bottlenecks as factories, distributors, etc begin to open back up. Companies are facing increased shipping times and higher shipping costs.
The PM Group has clients in many retail categories, and they report significant cost increases in many areas of their business. Restaurants chains like IHOP and SILO Elevated Cuisine have multiple financial pain points with rising labor shortages and rising food costs. Beyer Plumbing reports major supply chain cost increases for pipe and water heaters. Sadly, the list is long for most businesses.
About The PM Group: The PM Group was founded in 1988. For over 33 years, the agency has continued to grow and is San Antonio’s largest marketing and advertising agency. The PM Group’s client roster spans numerous industries including home services, automotive, CPG, entertainment and sports marketing, legal, business services, non-profits, real estate and fitness. For two consecutive years now, the Agency has set annual revenue records with the addition of six new clients and through the continued success of our existing clients. Additionally, the agency hosts their annual Charity Gala that to date has raised millions of dollars for local San Antonio area non-profit organizations in the last 15 years! In 2020 alone, the Agency donated over $1,050,000 to local non-profits. It is our way of giving back to the community that we so humbly serve.