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The Consumer Price Index report was released yesterday, revealing that headline inflation has risen 5.4% in the past 12 months. Prices jumped particularly in the six major categories of grocery stores and in the energy sector. Supply chain disruptions have also caused major bottlenecks, sparking prices for beef, poultry and eggs. A rapid decline in demand for air travel last year also led to a slowdown in oil production, and then a recovery when demand did.
Read more: Additional Crude Oil Reserves Are On The Rise – Could This Lead To Lower Prices?
See: Why Raising the Cost of Living by 6% Inflation for Social Security Could Be a Double Edged Edge
According to the Ministry of Labor, here are the areas where prices have increased the most in the main key categories:
- Rental cars: 42.9%
- Gas: 42.1%
- Used cars: 24.4%
- Hotels: 18%
- Televisions: 12.7%
- Furniture: 11.2%
- Meat, poultry, fish and eggs: 10.5%
- New cars: 8.7%
- Household appliances: 7.1%
- Electricity: 5.2%
- Catering prices: 4.7%
- Rent: 2.9%
A global shortage of computer chip supply has caused the cost of rental cars to skyrocket as new cars have not been available for production around the world and as a result used cars have flooded the market. Marlet. Car rental companies typically take new cars or cars that have completed a one or two year lease to rent them to their customers. As auto customers flocked to used cars, the scarcity of the used car market has caused prices to skyrocket more than any other category.
Read: Kraft Heinz to consumers on inflation-linked price hikes: ‘get used to it’
Consider: Increased demand and scarcity lead to high gas prices over 7 years – Will it get worse?
Gas prices are also rising sharply. The unprecedented decline in demand for air travel caused the global price of oil to drop sharply during the pandemic, leading OPEC countries to cap their production. The sudden resurgence in demand left them unprepared for the new supply that would be needed, pushing prices up. Levels rose further, as the Delta variant and low global vaccination rates prevented a full economic take-off and steady demand. This led to OPEC’s decision not to increase production further, resulting in even higher price levels, up nearly 42% for the year.
With food distribution factories facing supply blockages, restaurant prices have also had to increase their prices, by nearly 5%.
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Last updated: October 14, 2021
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