Price Volatility Might Not Stick Around, But It’s Here For Now

Two weeks ago, the Federal Reserve said sharp inflation would only be temporary, and that high prices on goods are “largely reflecting transitory factors.” Only time will tell whether the Fed was right, but in the meantime, price swings are…

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Two weeks ago, the Federal Reserve said sharp inflation would only be temporary, and that high prices on goods are “largely reflecting transitory factors.”

Only time will tell whether the Fed was right, but in the meantime, price swings are starting to hit everything from the gas pumps to your morning Cheerios.

Lumber and Gas Play Seesaw

Whether it’s hitting the road for a holiday retreat or spending cash like its going out of style, post-lockdown Americans are sending the prices of goods, commodities, and services in all sorts of directions:

  • The great lumber bubble of 2021 has officially popped. After trading at all time highs less than two months ago, the commodity is now down 13% in 2021, its first negative half in six years. The collapse kicked in just as many Americans hit pause on home improvements to take a vacation.
  • General Mills said it’s raising prices on almost all its grocery products. The food giant and Cheerio-maker expects higher-than-usual ingredient, packing, trucking, and labor costs to raise expenses 7% this year, and admits it’s unsure how consumers will behave. “We are ending one period of significant consumer disruption only to start another,” CEO Jeff Harmening told The Wall Street Journal.
  • And with 43.6 million Americans set to hit the road for July 4th weekend, the nationwide price for a gallon of gas hit $3.09 Wednesday — the highest going into the holiday since 2014.

A rush to restock goods and supplies from China, meanwhile, has overwhelmed the cargo shipping industry. Ships are only reaching ports on time in 35-40% of cases, down from their usual 75% average. But cargo ship companies aren’t the ones suffering: their rates are up 66% since January.

A Cold Retail Season: “We are short of summer sandals and bikinis and we’ll probably be short of boots and coats when the winter sets in,” Anna Moore, a clothing boutique manager in White Plains, N.Y., told the WSJ. “Shipping costs have tripled since last year, but merchandise comes in up to 45 days late.”

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