A never-ending pandemic is leading to price hikes and quality reduction
None of us need more bad news as we commemorate the end of our first year under house arrest. But a never-ending pandemic is throwing up worrying signs that prices on many household goods and bills are creeping up. Here are some things that will lead to price inflation:
- In the hospitality, entertainment and travel industries, many participants will unfortunately not survive the pandemic. The survivors will have less competition and will need to hike their prices to recover losses.
- Many countries are printing money or borrowing heavily to pay for pandemic relief. This will eventually cause inflation as the pandemic continues. Inflation, wherever it happens, feeds in to price hikes around the world.
- Productivity in companies around the world is being badly hit by the pandemic, this means companies will have to raise prices to stay above water.
- There is some evidence to show that remote working is reducing innovation and creativity, meaning fewer new competitive products and solutions for consumers.
- The non-covid health impacts on economies are going to be big – and expensive. Illnesses that are not being treated because of covid combined with the increase in mental health problems because of lockdown mean tax hikes are likely- the UK has already increased corporate taxes. These hikes will feed through to higher prices.
- Changing consumption patterns during the pandemic means there are a shortage of shipping containers which in turn means products from China and Asia in general are harder to get and can become more costly.
The pandemic, combined with the already inflationary effects of Brexit, will almost certainly lead to price hikes in Ireland that will affect consumers. Another related effect is that where prices stay at the same level, quality is being reduced.
Stay vigilant, keep track of what you are paying and make sure price hikes or service reductions are not introduced by stealth. Shop around and switch provider if you see price creep or quality reduction.
Happy shopping, happy St Patricks Day!