One thing is certain: Inflation feeds on inflation and price increases create new price increases. We're in the early innings of this particular cycle and so the psychology of "never increasing prices" is still strong; that will change and with it will come a new tendency to increase even more. For now most owners are just maintaining margins using price increases but if demand picks up they will be tempted to "pad" their margins and, why not?
"E-commerce sales hit record. Sales at gas stations & electronics stores fell as prices fell. Used car dealers faced buyers’ strike, new car dealers supply shortages. Food store sales up on spiking prices."
The drivers of new inflation a few months from now are already being prepared as COLA increases on SS checks will be higher than in 42 years!
"The Social Security Administration recently announced an 8.7% cost of living adjustment (COLA) for next year. That goes on top of a substantial 5.9% COLA for 2022. The 2023 increase is the largest in 40 years."
Even though that sound like good news it won't cover the actual increases in cost of living that are coming, not even close. Owners should be preparing now by managing incoming and existing inventory, negotiating down transportation costs and securing affordable capital lines.
Many owners are going on offense and making moves to take advantage of opportunities and consolidate market gains. There is a cottage industry growing already in sourcing many products which used to be readily available. The uncertainty is heavy in the services sector where many business owners have a lot of capex:
“Retail sales” here track sales of goods, not services, but the raging inflation has shifted from goods to services – and in services, inflation is raging at the worst rate since 1982."
This is where the "rubber meets the road" as actual increases result in actual bottom line results for better or worse.