Photo: RetailWire
Inflation is a top concern for both businesses and consumers currently, and rightfully so as the U.S. trend continues to remain high.
The most recent Consumer Price Index national average for October was 7.7 percent, down from the high of 9.1 percent in June. Meanwhile, the cost-of-living adjustment for 2023 will be 8.7 percent, impacting benefits for over 70 million Americans, but falling short of current inflation.
Although container rates may be stabilizing, retailers are coping with a variety of other factors such as staff shortages, inventory glut and inventory that was purchased at high rates. Retail prices are therefore being driven up exponentially.
Meanwhile, several companies are being called out for corporate greed for opportunistically raising prices under the guise of inflation, resulting in record high margins. Some have justified their price actions as an effort to recoup losses during the pandemic, but consumer trust is low. This is further exacerbated by consumer awareness of shrinkflation as reported by RetailWire and others.
Considering all of the factors impacting inflation, the pressure is not evenly distributed across the country, yet most pricing strategies take a blanket chainwide approach. In a recent analysis by WalletHub using data provided by the U.S. Bureau of Labor Statistics, the team calculated localized inflation rates.
Cost of living has long been a key metric, but inflation by location is an interesting concept. Cities such as Phoenix, Atlanta, Miami, Tampa and Baltimore saw the highest impact. These metro cities likely experienced shifts in population during the pandemic and trended towards work from home structures. Curious about your own personal inflation rate? Several resources are available online, such as this tool from the New York Times.
The always unique state of California, who’s metro area San Francisco ranked low on the local inflation rate, has taken steps to further offset inflationary pressure for its residents. California will be providing “Middle Class Tax Refund” payments in the form of debit cards. Retailers can likely expect a surge in purchases following their release, much like in the case of stimulus checks.
Considering the traditional factors and variables, retailers are taking action using a variety of tactics, including inventory cuts, order cancellations, layoffs and capital expenditure reductions, price freezes and rollback pricing on essential products.
- Consumer prices up 7.7 percent over year ended October 2022 – U.S. Bureau of Labor Statistics
- 12-month percentage change, Consumer Price Index, selected categories – U.S. Bureau of Labor Statistics
- Consumer prices up 9.1 percent over the year ended June 2022, largest increase in 40 years – U.S. Bureau of Labor Statistics
- Cost-of-Living Adjustment (COLA) Information for 2023 – Social Security Administration
- Your ‘personal inflation rate’ varies by where you live, among other factors – CNBC
- Cities Where Inflation Is Rising the Most – WalletHub
- What is your personal inflation rate? Here’s what it looks like in 23 major cities – Fortune
- Is ‘shrinkflation’ a better option than charging higher prices at retail? – RetailWire
- What’s Your Rate of Inflation? – The New York Times