Hello Inflation!

These headlines were on the front page of The Wall Street Journal on March 17th:

Housing Boom Boosts Prices for Wood, Copper and Bricks

Toyota, Honda to Halt Some U.S. Production Over Supply Shortages

Texas Freeze Triggers Global Plastics Shortage

Anecdotally, I talked to a friend that day who does a lot of business in the beer industry.  Lead times on cans are 8 weeks versus less than 2 weeks normally and the price of beer cans is up 30% this year.  It is one thing to have to wait to get a new car but God help us if there are canned beer shortages.  The outdoor drinking season officially kicked off on St. Patrick’s Day for those of us in the north.  Canned beer is the beverage of choice for safety reasons. 

I recently went to Costco.  A sign above the paper towels said, “Due to cost increases, we have changed the amount of paper towels on a roll from 160 to 140.  The number of rolls in the package and the price remain the same.  Thank you for your understanding.”  Let’s do a little math:  160 – 140 = 20.  20/160 = 12.5%.  For those of us keeping score, that is effectively a 12.5% price increase.  But the price of the package remains the same!  Costco is apparently taking lessons from ice cream manufacturers.  They started reducing the amount of ice cream in a package years ago.

Across the globe, there is too much money chasing too few goods.  Paying more for things is a challenge but the bigger challenge is going to be actually getting things.  We are used to having things in abundance.  Remember, we essentially shut down industrial production for several months last year.  We are feeling the effects of last year’s shut down in today’s supply chain.

It seems like decades ago but just about this time last year, there was a run-on toilet paper.  Stores put in purchase restrictions, comedians made jokes about it, and we moved on with our lives.  I hope things go that smoothly this time.  Hold on to your hats.  It is going to be a wild ride for the next few months. 

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