Supply Chain Issues Hike Inflation – What You Can Do
Supply chain breakdowns, long gas lines, and increased inflation. How did the world get to this point?
How did the United States?
Supply chain issues mean that products are stopped in the production stage or there are gaps in transit. And it affects you, determines when you can shop, and increases inflation when means the buying power of the dollar decreases.
Imagine that. The buying power of the dollar decreases, during inflation, when there are fewer things to buy than normal.
Why is this? And What can you do?
Supply Chain Issues
I am a traveling writer who has been working for years, long before the coronavirus pandemic. I am still living in Asia.
It’s funny what you take for granted when you move. I save a lot of money converting dollars into the local currency. My standard of living costs is very low compared to when I was living in my native New York City.
But there are tradeoffs. The quality of living here is not the same as in the USA. Public services and societal infrastructure are lacking. I miss the wide variety of products available in New York City. I have to go to a big mall here to find a wider variety of local fruits.
But I recently called my relatives in the United States and found that they are having similar issues with unavailable products.
My brother told me that when he went to the supermarket it was out of paper towels and other products for days.
I can’t wrap my head around that. I struggled to believe him.
You can get anything in New York City. How are major supermarkets struggling to keep products on shelves? Why are gas stations struggling to keep their underground tanks filled with gasoline?
Whether it is due to the pandemic, the damage accompanying lockdowns wreaked on the economy, or flawed reopening strategies, there are supply chain issues locally and globally.
And supply chain issues cause inflation to increase.
Which means that your dollar buys less and less.
Supply Chain Issues = Higher Inflation
A supply chain is a network and infrastructure upon which commercial products are shipped from factories to stores or your doorstep via Amazon on a predetermined schedule.
When gasoline, retail goods, and grocery products are shipped, it is done on an exacting schedule. If production is halted or halts or gaps occur in transport, then goods become noticeably unavailable before they are replenished.
Major cities only have enough retail goods available for about 72 hours.
If goods are not replenished on schedule before they run out, which is how supply chain infrastructure works, then empty store shelves and dry gas pumps result.
But that is not the worst of it.
Remember the laws of supply and demand. The less there is of a product, the more consumers pay. So, your dollar is paying more for less purchasing power.
That is the basic definition of traditional inflation. But this kind of inflation is caused by supply chain problems.
Consumers are competing for fewer products now due to the pandemic, botched reopening strategies, and the wrecked economy. And businesses are incrementally raising prices to recoup their losses – even though there are fewer things to buy because of the supply chain shortages.
And how long might it last?
Inflation is at 5%. That means the price you pay for a gallon of milk, or a pound of beef and other products right now will double in 15 years if inflation doesn’t creep back down.
And the way things look now, that won’t happen soon.
So, what can you do about this?
What Can You Do
Inflation is built into the American monetary system, so there is no way to avoid it. But here are a few things you can do.
Buy Strategically and Prioritize Need Over Want
Yes, you should be adjusting your budget regularly, but that is not what I mean.
Before you go shopping or run errands, make a list. But only what you need to get through the day or week. Stick to the list.
Or you could decide to make a day trip and buy what you need in bulk. But only buy what you need and know what you will use.
Americans are notorious for wasteful impulse shopping.
Make a list and stick to it. Buy strategically and stock up on what you need.
And use what you buy. The average American household throws out 40% of the food they buy every year. That is the equivalent of lighting $1,500 on fire annually.
Buy Generic Instead of Brand Name
The average American household spends over $4,643 annually on their groceries. Or about $390 monthly.
The best way to cut down on grocery bills is to always buy generic. Brand name and generic products are made from the ingredients.
When you buy brand-name products, you are paying more for the appeal of the brand.
A research study found that generic products are manufactured with the same quality as brand-name products.
Ask your doctor to prescribe you the generic version of your meds when possible.
Buying strictly generic products when you shop can save you up to 40% or more on your expenses.
No, you don’t need to spend a weekend cutting out coupons from your local paper. You can now download or print digital coupons. There are numerous websites dedicated to aggregating weekly coupons for you to use.
The average family can save up to 10% on their shopping expenses via extreme couponing.
Start Comparison Shopping
Now is not the time to stay loyal to a supermarket or retailer that runs out of your favored products for days or weeks.
Start researching and visiting every alternate supermarket, grocery store, retailer, and gas station in your immediate vicinity.
Expand your search parameter as much as you can.
Make a day to visit another city or state if you can to find cheaper goods.
If you have any tips for frugal shopping, dodging inflation, or how to save more money, leave a comment below!
Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.