Prices jumped 5% in May from a year earlier, fueling debate in Washington

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This chip shortage, which is due to plant closures during the pandemic and one-off issues like a drought in Taiwan, may take time to resolve, but is expected to prove temporary. As a sign that companies are finding a way to adjust to the global shortage, General Motors said earlier in June it would start increasing shipments of pickup trucks and other vehicles to dealerships.

Air fares show another trend. Few people flew for vacation or work last spring, which has driven prices down. As people return to the skies, the data shows a sharp increase in prices, even though this particular price index has not yet fully recovered to its pre-pandemic level.

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These effects should wear off over time. Instead, economists analyze the data for signs that price increases will prove to be more sustainable. For example, two measures of housing costs that make up a large part of the inflation reading, but moving slowly, rose in May. Economists pay close attention to these metrics – rent and what’s called landlord equivalent rent, which tries to capture how much owned homes would cost to rent.

“We’re getting a rebound sooner than we imagined – it’s important,” said Laura Rosner-Warburton, also founding partner of MacroPolicy Perspectives, speaking on the same call as Ms. Coronado. But Ms Rosner said she also expected price pressures on other goods and services to ease.

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Yoram Weinreich, founder of a furniture company called Simpli Home that sells dining tables and TV consoles both direct to the consumer and through online retailers like Wayfair and Amazon, has already raised prices this year. . He said he expected an “average double-digit” increase – around 15% for some products – in the coming months.

The era of the pandemic has been a wild ride for Mr. Weinreich. He expected demand to collapse last spring, but instead it increased as consumers stayed home and with stimulus funds in their pockets they bought furniture. Factories in Asia and Brazil were unable to keep pace with new orders. Today, international shipping costs have skyrocketed and it is difficult to get containers at any cost.

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“He was getting used to the new demand, then it was the capacity of the plant, and now you can’t get containers,” he said, explaining that he expects prices remain high at least during the Chinese New Year in February, thanks to the shipping cycle. “Consumers are going to take a huge shock over stickers in the short term, and by how much will it go down? “

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