How will shipping costs affect the inflation rate in 2021?
We do not have to tell you that COVID-19 has changed life in many different ways, but it has made more changes than you have likely considered. For example, did you know that shipping prices have steadily increased throughout 2020 and into 2021?
Throughout the pandemic, Americans stuck in their homes have increased demands for orders that often come from factories in other places, like China. These items must be carried across the ocean in large shipping containers. The increased demand has caused containers to pile up at the ports while the countries of origin are experiencing container shortages. Additionally, the shortage of workers due to pandemic restrictions limit the availability of workers who can handle the cargo on both sides of the Pacific.
The result of all of this? A serious disruption of supply chains around the world that drive the costs for shipping up. The last three months of 2020 saw shipping prices rise to new heights, and analysts expect the prices to continue rising in 2021 possibly until midsummer as life slowly begins to return to normal with the vaccine rollouts.
How does all of this affect the inflation rate of 2021?
The U.S. maintains an average inflation rate, which is the rate of increase in the consumer price index that changes over time. The U.S. typically tries to maintain an increase of 2% every year to help make sure interest rates remain affordable and to help keep the economy stable.
However, significant economic setbacks, such as the increased shipping costs, can have ripple effects throughout the economy. The higher costs of shipping lead to higher costs of the products being shipped, which include food, electronics, and other devices that we all need or want in our day-to-day lives. This could drive an increase of inflation rate to help stabilize the economy that has been thrown off balance by all these recent changes.
Talk to a ProVise CFP® professional about the inflation rate and your financial plan
The inflation rate is an important factor in your financial plan. You want your wealth to grow at a higher rate than the inflation rate, so that your money gains value rather than losing it as inflation increases. However, keeping up with inflation and other areas of the financial world can be time consuming and difficult. That’s why you should work with a financial planner to build a financial plan that will help you reach your goals.
At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about the 2021 inflation rate and how it affects your financial plan? Contact ProVise today to schedule a complimentary consultation.