Inflation hits home, increases costs for Normandy businesses | New
With inflation exceeding 5% for the fourth month in a row, Normandy business owners say their concerns increase with their operating costs.
According to the monthly report of the US Department of Labor, the annual inflation rate in the United States is 5.3%.
The inflation rate hit its highest level in 13 years with year-over-year growth in June at 0.9% and consumer prices are expected to continue rising 5.1% in the fourth quarter , according to the National Association for Business Economics.
Experts are now withdrawing their forecasts of an economic recovery following the effects of the COVID-19 pandemic, according to the Federal Reserve’s growth forecasts.
“It hasn’t really affected business volume yet, but it will because people’s paychecks don’t go up with prices,” said Bobby Patterson, director at Ellison Feed & Seed.
Robert Dauffenbach, senior associate dean of economic development and impact at the University of Oklahoma Price College of Business, cites a number of factors that make consumers feel inflation in their wallets, including price adjustments. the supply chain.
“There is a great disruption in the supply chains, and it shows in the congestion in the ports, where the ships are unable to unload their cargo, and we are also seeing a pull away from China, which was the primary manufacturing location in the world, “Dauffenbach said.” There has been a displacement to Vietnam and other places, a lot of it here. “
Dauffenbach said another reason for the increase in commodity prices is an inflated stock of money due to federal bond buying programs designed to incentivize consumer spending with low interest rates. Last month, the Federal Reserve announced that the central bank would soon withdraw its monthly purchases of $ 80 billion of Treasury securities and $ 40 billion of mortgage-backed bonds.
The Federal Reserve expects inflation to fall over the next year, reaching 2.2% by the end of the fourth quarter of 2022.
Dauffenbach said achieving an inflation rate below 3% will require significant acceleration in the supply chain. He fears this may not happen at the rate that national experts expect.
“In the end, I have the impression that we are not taking stock of some of our [economists] like Milton Friedman, who said that “inflation is always and everywhere a monetary phenomenon,” said Dauffenbach.
In Norman, the rising cost of goods and materials affects the way many businesses receive their products and their prices. Top Dog Pet Resort co-owner Terri Carmichael said she has been paying 5% more for dog food and treats since the spring.
Carmichael said the property is getting around this increase by researching deals and maintaining flexibility when selecting a brand.
“We’re trying to go to Sam’s and buy wholesale,” Carmichael said. “Typically, they’ll get $ 4 or $ 5 off different brands, so I just get what’s on sale and shop wisely.”
Dena Deveraux, director of Copelin’s Office Center and the Kidoodles Toy Zone, said before the pandemic sellers will change their prices once a year. She now sees price increases with every order she places.
Deveraux said she is also seeing suppliers change their freight policies, adding costs to the inflated price of products.
“They used to give free freight if you buy [a certain] amount, and they threw it away, so we have to pay the freight and they won’t ship the entire order, ”Deveraux said. “We’ve seen this since the onset of COVID-19, but it’s happening more and more. “
The price of food has also increased. According to a summary of the Producer Price Index press release released monthly by the United States Bureau of Labor Statistics, the processed food and feed index rose 2.1%.
For the 12 months ended in August, the processed products index for intermediate demand climbed 23%, the largest 12-month increase since February 1975, the summary says.
Jennifer Blackburn, owner of Cellar Wine & Spirits, said the prices of imported products such as French wines, liqueurs, scotch and Irish whiskey have increased the most. Even some domestic products like beer and bourbon are more expensive recently at wholesalers, which means higher prices for the customer.
“Unfortunately, we have to pass this cost on to the customer,” said Blackburn.
Patterson said all of its produce, including grass seed, increased by about 5%. He expressed concern about the volume of business the store would receive if the inflation rate were to stay above 5% in the new year.