Inflation

Corporations are using the pandemic as means to raise prices (and profits) aggressively: https://www.nytimes.com/2022/05/05/opinion/us-companies-inflation.html

What we have learned is that demand for many items is inelastic, and that vendors have consolidated to the point that competition for many goods is limited. As a result, producers will push pricing to the point that it affects sales. We see this in the housing market, where there is little or no price point that consumers will not push through. Supply is more limited in this case in many markets, yet housing prices continue to inflate by ~20% per year or more. I see this as akin to the Japanese asset price bubble of the late 80's and early 90's where access to easy credit caused rampant speculation in the markets which carried over to consumer goods, such that being a tourist in Japan is now on a whole other level of expensive compared to the cost of visiting New York City, etc, and inflation there is continuing to rise against a backdrop of reduced manufacturing. I would be prepared for the higher costs for everything to continue at least five years.

Personally, I have seen this happening at the Bakery, where virtually all of our supplies and ingredients have risen by 20-50%.

Check out this substack from Chartbook. We are going through a relatively intense inflation cycle. I believe profits are actually going to go super high 1 year from now as inflating costs of goods sold will be passed on to consumers in the form of even higher prices. And they will pay it. Demand is relatively inelastic right now.