More big-name companies say they're raising prices because it's costing them more to make their products.
“What I believe is that 2021 is lining up to be the worst year from an inflation standpoint for the past 30 years,” said Patrick Penfield, professor of supply chain practice at Syracuse University.
It’s not great news when it comes to what we'll be spending the rest of the year at grocery stores or online for everyday products.
“You’ve got kind of the perfect storm for price increases to happen in addition to all the product shortages that are happening right now,” said Penfield. “These guys in the logistics networks, they haven't had a chance to catch up and the demand. Just keeps coming. We're seeing record imports coming in now.”
The pandemic has caused disruptions in the supply chains starting with the chemicals needed to make raw materials.
There have also been disruptions in transportation, from shipping to trucking, including the Suez Canal blockage and the Texas winter storm disaster.
On top of that, energy costs are rising alongside demand.
“A lot of companies have tried to show restraint, because they know a lot of consumers have been hit hard, but they're not going to have a lot of choice. You know, what we're seeing, especially in transport and logistics costs, those are going through the roof,” said Willy Shih, professor of management practice at the Harvard Business School.
“The other issue we have is once you see somebody else increase prices, it allows you to kind of pass along that price increase too,” said Penfield.
Predictions are price increases could continue the rest of the year. We could be paying as much as 4 to 5% more on items.
One way around that may be to help drive up competition.
“If the name brands keep increasing prices, then maybe the option is looking at some of the house brands. You know, the house brands that companies sell, so a lot of times they are as good from a quality standpoint and usually a lot less from a price standpoint,” said Penfield.
You may also want to put off any large purchases like vehicles until supply increases and prices start to drop.