Inflation 2022: The Pricing Problem

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The 2022 selling season is getting underway, and buyers are looking for next year’s pricing. I am hearing, however, that for the first time in memory, factories are unwilling or unable to quote prices.

You can certainly understand why. Take a look at this graph from the U.S. Bureau of Labor Statistics. It looks at inflation by month from September of 2020 through August of 2021 (September data is not yet available).

We have been at or above an annualized inflation rate of 5% for the last four months. To provide a comparison, here is the annualized inflation rate for the last five years:

2020 1.4%

2019 2.3%

2018 1.9%

2017 2.1%

2016 2.1%

The challenge, of course, is no one knows (and that includes the Federal Reserve) how bad inflation will continue to be and for how long. That’s why it will be a challenge getting fixed prices until the future gets a little clearer.

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