How high prices and a tangled supply chain is gripping the economy
Since the pandemic erupted two years ago, Forest Ramsey and his wife, Kelly, have held the line on prices at their gourmet chocolate shop in Louisville, Kentucky. Now, they’re about to throw in the towel.
So having just tried to survive for the past two years, the Ramseys, who own three retail outlets and sell custom chocolates to about 25 bourbon distilleries, have reached an unpleasant decision: They’re going to raise their customer prices 10% to 30%.The struggles of Art Eatables illustrate how inflation and tangled supply chains have seeped into nearly every nook of the economy, forcing consumers and businesses to make painful decisions that many of them have never had to contemplate before.
And an acceleration of apartments rents, many economists say, will likely help keep inflation up at least through the end of this year. Rising prices are also broadening from pandemic-battered industries like autos to wider categories of goods and services, from electricity to clothing to airfares. That suggests that high inflation will outlast COVID-19.
“We have not seen any meaningful impact to customer demand,” John Culver, Starbucks’ chief operating officer, said on a conference call with investors, referring to the company’s two price hikes last year. “To the contrary, our customer demand continues to grow.”Many analysts had warned that spending would slow once the government’s stimulus programs expired. But the early signs suggest that that hasn’t happened.
More Americans have returned to cities, after some had left in the early months of the pandemic. The apartment vacancy rate has reached its lowest level since the mid-1980s, according to a report from the Harvard Joint Center for Housing Studies. And with job growth strong, more young people are expected to move out on their own, raising demand for apartments.
“Labor supply is increasing quickly, and that will put downward pressure on wages and prices,” Ozimek said.
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