The stimulus-fueled economy is rebounding and Americans are again spending on shopping, traveling and eating out. But the pandemic is far from over, and supply-chain woes mean supply isn’t meeting demand – sending prices even higher.
US consumer prices in April increased 4.2% from a year earlier, more than the 3.6% economists had predicted. It was the biggest 12-month increase since September 2008, the height of the financial crisis.
Here’s what’s getting more expensive and why, according to CNN Business’ writers.
Chickens are in short supply, sparking an increase in prices. Part of the blame goes to Tyson’s roosters.
The meat processor, which sells poultry along with beef and pork, said that its chicken volumes have been low in part because the roosters it uses for breeding are not meeting expectations.
“We’re changing out a male that, quite frankly, we made a bad decision on,” said Donnie King, Tyson’s chief operating officer and group president of poultry, during an analyst call this week.
To increase its chicken supply, Tyson (TSN) is switching back to the male breeding chickens they previously used. The company declined to share what will happen to the rejected roosters, or how many are being swapped out.
Food in general is also getting more expensive: Prices rose 0.4% in April as both groceries and restaurant prices went up. Year-over-year, food prices are up 2.4%.
A growing number of gas stations along the East Coast were without fuel over the last week as nervous drivers aggressively fill up their tanks following a ransomware attack that shut down the Colonial Pipeline, a critical artery for gasoline, for six days.
The panic-buying threatened to exacerbate the supply shock. US gasoline demand climbed by 14% on Tuesday compared with the week before, according to GasBuddy, an app that tracks fuel prices and demand.
The pipeline reopened Wednesday night, but before it did average prices at the pump climbed above the key psychological milestone of $3 a gallon on Wednesday for the first time in more than six years, according to AAA.
The beginning of 2021 has seen home prices continue to climb to new record-breaking heights, with prices rising in almost every major metro area. Limited inventory is partly the reason why.
In 99% of metro areas tracked by the the National Association of Realtors, prices in the first quarter of 2021 increased over the same period last year, according to a NAR report. Nationally, the median sale price for existing homes climbed 16% from the first quarter of 2020 to $319,200, both record highs since NAR began tracking city data quarterly in 1989.
Nearly 90% of metro areas saw double-digit percentage price increases over last year. By comparison, only 25% of areas saw such growth in the first quarter of 2020, when housing inventory was at a healthier level and better matched the pace of monthly demand.
As the pandemic crushed the US economy last spring, sawmills shut down lumber production to brace for a housing slump. The slump never arrived and now there isn’t enough lumber to feed the red-hot housing market.
The shortage is delaying construction of badly needed new homes, complicating renovations of existing ones and causing sticker shock for buyers in what was already a scorching market.
Random-length lumber futures hit a record high of $1,615 last week, a staggering sevenfold gain from the low in early April 2020. That’s a big deal because lumber is the most substantial supply that home builders buy. The price fell to $1,533 on Wednesday.
Used cars and trucks
The biggest driver of April’s inflation jump was a steep 10% increase in used cars and truck prices. That spike accounted for more than a third of the overall inflation increase and was the biggest price rise since the government started tracking used car data in 1953. Over the past year, used car prices rose 21%.
Making matters worse is that car dealer lots have only a fraction of the vehicles that they typically have of both new and used vehicles. That’s sending prices to record levels. For example, the average new car price was $37,200 in the first quarter, according to JD Power, up 8.4% from the same period just a year ago.
“That puts wholesale used prices at the highest level they’ve ever been,” said David Paris of JD Power. “And we are seeing used retail prices accelerating rapidly.”
–CNN Business’ Anna Bahney, Matt Egan Chris Isidore, Anneken Tappe and Danielle Wiener-Bronner contributed to this report.