JANUARY HOT TOPIC: Inflation
January 25, 2022
Was Christmas a little bit different than years in the past?
Just two years ago, families gathered around the Christmas tree that was overflowing with toys, household goods, and a plentiful supply of gifts to go around. Following the gift frenzy was an even greater supply of food from turkey and ham to cornbread dressing, many vegetable side dishes, and an arrangement of pies that made you feel like you were in a bakery. At least that has been the tradition in my family since I was a child.
As we all know, the COVID-19 pandemic changed the way most people spent the holidays when many families chose or were forced to forego large gatherings with extended family. Shopping malls were empty as many consumers bought gifts online to avoid crowds of people. The influx of cash from government stimulus checks helped individuals and families bridge the gap between loss of income due to pandemic related shutdowns and job loss, whether temporarily or long-term.
After all the changes we have experienced the past 22 months, Christmas 2021 just felt a little different, and in my opinion, even more special. Having the opportunity to gather with family once again made this year’s Christmas experience one to remember. My family chose to focus our attention on quality time rather than buying gifts that, let’s be honest, we don’t really need. This shift in focus helped us realize the importance of the deeper connection amid the economic unrest that developing all around.
Even though stores were opened to the public, the Christmas shopping frenzy was noticeably diminished. Retail stores such as Target and Walmart were forced to reduce hours of operation due to staffing shortages. These shortened holiday hours brought back memories from when I was a child and stores closed for the holidays; not to mention when Black Friday started in the wee hours of the morning following Thanksgiving Day.
Many hot-ticket items this season were found to be in limited supply. Chip manufacturers reported an inability to produce microchips at the speed of the demand from manufacturers and consumers. Philadelphia Cream Cheese released a statement offering to pay consumers to not bake cheesecakes due to a lack of supply of cream cheese in some areas of the country. The staffing issues and limited supply of goods most desirable for gifting this season were not the only impacts we have seen on the economic post-pandemic environment. Consumers noticed a much higher price tag when it came to everyday items as well.
Over the past 12 months, we have seen a 33.3% increase in energy and 6.1% increase in food costs. Consumer prices are up across all areas of the economy by an average of 6.8% over the past year. Not all consumer goods have fully priced in inflation; however, we are seeing prices trending in the upward direction as more consumers look for ways to save on everyday expenses.
Costs of Popular Items, 2019-2021
|Spiral ham (5 pounds)||$18.08||$12.11||$19.68|
|Frozen turkey (15 pounds)||$12.63||$15.08||$17.00|
|Potatoes – yellow, white, red, russet (5 pounds)||$5.19||$5.09||$5.51|
|Regular Gas in Georgia||$2.04||$2.25||$3.10|
Every person has been impacted in one way or another by the pandemic, and we are still figuring out the new, post-COVID, normal as economic, political, and social conditions are ever changing. With new variants of the virus popping up around the globe and the Fed raising interest rates beginning in 2022, there are many factors that will be impacting market activity as we head into a new year.
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