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Price Hikes: Local and Global

According to the United States Bureau of Labour Statistics, the Consumer Price Index increased 8.5 per cent for the year ended March 2022, following a rise of 7.9 per cent from February 2021 to February 2022. The 8.5-per cent increase in March was the largest 12-month advance since December 1981. Some sectors have been hit especially hard by price increases. Here we detail some of those increases and their causes.

Scorching Real Estate

Despite being hot and humid, Miami is still a desirable place to live, as evidenced by the hottest real estate market in the country. Miami led the U.S. in rent hikes during the pandemic. Miami’s median apartment rent skyrocketed 58 per cent to $2,988 per month since March 2020, according to a newly released report from Median rents increased nationwide by 19.3 per cent to a new high of $1,807, but cities in Florida’s famed Sun Belt saw many of the biggest increases. The trend follows migration to these markets since the onset of the work-from-home shift, with many residents leaving pricier Big Tech hubs. Over the past two years, Miami has become a magnet for techies from the West Coast and hedge funders and venture capitalists from New York. As such, many locals, or even recent transplants, are getting priced out of the city they have grown to love.

Computer Chips

Computer parts have always been made of some decently expensive components. Even if someone does not have a premium PC, the materials and labour costs of modern CPUs and GPUs are still quite high. While the raw material usage is not as high as with something like a car, one is still paying for a great deal of R&D and Manufacturing when buying something like a Graphics Card. That said, the current pricing situation is extreme, even for this sector, and there are a few reasons for this. The first is a global chip shortage that began in 2020. The chip shortage occurred because of supply disruptions caused by the pandemic. Since the pandemic required many workers worldwide to quarantine safely at home, the supply chain upon which PC hardware is reliant was greatly diminished.
Manufacturing a given PC component isn’t as simple as running a single factory for it. Often, individual components for dozens of different products from dozens of different factories located in several countries across the globe are required to produce a single high-end PC. This shortage of labour, logistics, and materials makes hardware more expensive, but it also results in there being much less hardware to go around overall.
And since the pandemic resulted in people spending much, much more time indoors and working from home, this results in incredibly high demand. Besides the pandemic disrupting the supply chain and workflow that kept PC hardware on the market, it also created a much higher demand for hardware capable of keeping people entertained or in the workplace from home.

Used Cars

According to the U.S. Bureau of Labor Statistics data on Thursday, the consumer price index for used cars and trucks jumped up by 40.5% from January 2021 to January 2022. That means within a year, the average price of used cars and trucks for urban consumers has gone up by 40.5%. And as bleak as the market is for used-car buyers, the aforementioned computer chip shortage has also driven new-vehicle prices higher. The average new vehicle, says, is edging toward 46,000 USD. A shortage of workers has also led to fewer new vehicles being made. Kelly Blue Book said car manufacturers had more than 584,000 jobs they could not fill. Fewer new vehicles on lots also means fewer people are selling off their old vehicles. This led to a shortage of used cars, driving the price up. Like many pandemic-related supply chain issues, this problem is unlikely to be solved anytime soon.