When Americans read about inflation in the newspaper or hear rising prices pop up in a policy debate, it often feels like an abstract, far-away concept. But revealing remarks from a top Costco executive offer a timely reminder of how inflation ultimately gut-punches everyday people in the wallet.
CNBC reports that Costco CFO Richard Galanti recently warned that the big-box retailer is facing surging prices across its supply chain. This has manifested itself in a 20 percent increase in costs for essential goods like meat and increases in crucial operational expenses like shipping containers and aluminum foil.
“Inflationary factors abound,” Galanti said. “These include higher labor costs, higher freight costs, higher transportation demand, along with the container shortage and port delays … increased demand in various product categories some shortages, various shortages of everything from chips to oils and chemical supplies by facilities hit by the Gulf freeze and storms and, in some cases, higher commodity prices.”
Everybody is seeing INFLATION ... except the Federal Reserve and Treasury Secretary - Costco is seeing inflation abound, impacting a slew of consumer products #Fed #Powell #Yellen #Biden #inflation #prices #consumers #economic #financial #markets https://t.co/Cv8qJtgF1w— Dr. Michael K. Ong (@MichaelOngRisk) May 28, 2021
The company is trying its best to mitigate the costs without burdening consumers. Yet the CFO ultimately admitted that “some of [the inflation] has passed through” to customers in the form of higher prices at the checkout line.
“Galanti cited price increases as high as 8% and cited goods including pulp and paper, an assortment of plastic products as well as soda and cheese. Some apparel items saw price hikes of 3% to 10%,” CNBC reports.
It’s not just Costco, of course. The most widely-used metric for price inflation hit a 12-year high in April, showing that overall prices had risen 4.2 percent over a year. Another closely followed inflation metric that includes food and energy prices also came in high last week at 3.6 percent
Isn’t this all just fudging around the margins of business accounting calculations? Why should you care?
Well, remember that your real income isn’t the nominal figure on your paycheck—it’s what you can buy with it. So when prices go up, you are quietly getting poorer. In the case of Costco, Galanti warned that the retailer’s famously cheap $4.99 rotisserie chicken and $2.99 40-pack water bottles could soon be up next for price hikes.
When policymakers fuel inflation through irresponsible money printing to pay for their wasteful partisan spending agenda, it’s not members of Congress who go hungry or go without. It’s the everyday Americans who shop at businesses like Costco.