Increased Consumer Prices Have Many Causes

Misbar discovered the social media post may have originated on the United Conservatives for America Facebook site on April 30, 2021. The post implies that the increase in prices can be credited to President Joe Biden. Misbar broke down the post and investigated some of the goods mentioned and their price increases. 

Steel: The daily steel index increased by $6 to $1,351.75/st April 9, setting a new all-time high. U.S. steel prices have surged by nearly 210% since August 2020, shattering previous records set in 2018 according to SPGlobal.com. However, steel prices were steadily on the rise before the Biden administration, spurred by sparse service center inventories, tight mill order books and a lack of imports since the fourth quarter of 2020. Timna Tanners, managing director for BofA Securities, said: “US steelmakers did not do as well as global peers when it came to restarting capacity following coronavirus-related production disruptions in 2020.”

Lumber: Lumber prices set a new record almost daily, now up 67% this year and up 340% from a year ago according to CNBC.com. The surge in lumber prices in the past year has added $35,872 to the price of an average new single-family home and $12,966 to the market value of an average new multi-family home, according to the National Association of Home Builders. However, lumber prices are skyrocketing for various reasons beyond just high demand from homebuilders and remodelers. Lumber tariffs had prices already rising a year ago, but then when the pandemic hit, production shut down. The National Association of Home Builders had reached out to President Trump in August 2020 to address the supply shortages. 

Cotton: Cotton prices have risen to their highest level in nearly two years thanks to dry weather that has shrunk the crop and concerns of forced labor in China that have created smaller supply. A lack of rainfall in key growing regions has reduced expectations for the current crop according to the Wall Street Journal. The U.S. Department of Agriculture expects the smallest domestic crop in five years. Cotton prices have been steadily rising over the last 12 months. 

Oil prices: The U.S. Energy Information Administration (EIA) expects crude oil prices will average $64 per barrel (b) in the second quarter of 2021 and then fall to less than $60/b through the end of 2022. Higher crude oil prices in March and April are primarily a result of lower crude oil production from members of the Organization of the Petroleum Exporting Countries (OPEC) and partner countries. OPEC has been limiting oil production due to decreased demand during the pandemic.

To conclude, many consumer prices have risen to record highs over the last year. However, the rises are mostly due to the global coronavirus pandemic that has created supply issues. Weather has also played a role. Price increases mentioned in the social media post were trending upward prior to a change in administration at the Whitehouse.