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How Inflation Is Impacting You and Your Future Buying Power

As the world adjusts to the changes imposed by the coronavirus pandemic, inflation rates have jumped at its fastest pace in nearly 40 years. America’s consumer-price index rose by 7% in December 2021, causing the highest annual inflation rate since June 1982.

Government stimulus aid and low interest rates has caused the demand for goods in 2021 to skyrocket – boosting the economy immensely. However, the increased demand caused prices to rise sharply, and supply chains everywhere have felt the pressures of magnified prices and labor shortages, causing even more challenges in the current economy.

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Homes & Home Building

Many sources note that the lack of spending on restaurants and luxury items during the pandemic has increased the rate of savings for upper class families, driving a desire to invest in properties. This frenzied demand, along with a lack of homes available for purchase, has caused the cost of houses to increase significantly. While interest rates are at a historic low, the average cost of a home in the United States has increased by 14% in 2021 in comparison to 2020.

The lack of houses on the market has also driven buyers to invest in new build homes. Material shortages, along with increased demand for building materials has caused material pricing to surge. In March 2020, a ¾ inch plywood sheet cost $37.98. Now in 2021, average costs are $95.98 or more per sheet. Fortune predicts a continued frenzy around materials due to a shortage of nearly 4 million homes and large demand for building materials, keeping home builders strained and the cost of building materials high for years to come.

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Goods & Produce

With a significant strain on the supply chain, the costs of goods are surging. As the suppliers recover from mandatory closures, and supply chain strain, suppliers still have not been able to catch up with demand. Due to this, the pricing of goods and produce have increased, further adding to the current inflation issues. Lack of car production due to chip and labor shortages has also caused the used car market to surge, driving up prices and nearly eliminating inventory in dealerships across the country.

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How Can Credit Insurance Help?

IGS provides exclusive trade credit insurance policies that mitigate any bad debt loss or risk brought on by high inflation rates. By increasing cash flow and protecting a company’s accounts receivable, IGS trade credit insurance gives companies a protective shield against the quivering economy.

With interest rates increasing due to high inflation, companies will need to prove that they are protected from bad debt losses. With trade credit insurance from IGS, With TCI from IGS, companies can protect against any losses that come from bankruptcy or non-payment from their customers.

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What’s Next?

As long as demand continues to overtake supplies, inflation will remain elevated. Price gains may slow further as the supply chain constraints improve, but inflation likely won’t fall back to pre-pandemic levels anytime soon. Many economists also expect the Federal Reserve to raise interest rates in spring of 2022.

“U.S. inflation pressures show no sign of easing,” said James Knightley, chief international economist at the financial services company ING. “It hasn’t been this high since the days of Thatcher and Reagan. We could be close to the peak, but the risk is that inflation stays higher for longer.’’

It’s time to protect your business and look to trade credit insurance from IGS to provide your business with credit intelligence, information, and monitoring to help you make the best possible credit and business decisions.

Safely expand your inventory and safely extend credit to new or existing customers with the peace of mind that you will be paid. Let us remove the credit risk from your balance sheet, improve margins, and strengthen your balance sheet with trade credit insurance.