Prices are surging at the highest inflation rate in over 30 years.
Consumer prices rose by 6.2% in October compared to a year ago, according to the Bureau of Labor Statistics’ monthly report. This number represents the highest inflation rate since the 12-month period ending in November 1990.
The largest change was seen in the energy index, which rose 4.8% in the month, led by a 6.1% jump in gas prices. However, the increases were broad based across the U.S. economy. Airline fares and alcoholic beverages were among the few areas to register declines.
Footwear continued to show increases, a trend that has been building for the last six months.
Shoe prices increased 5.2% in October, compared with the year-ago period. Women’s footwear prices were up 4.2%, with men’s up 5%. Prices for kids’ shoes rose 7.5%. The results marked the sixth straight month in a row that footwear prices have continued to climb. In June, women’s prices surged 7% year-over-year, marking the sharpest price hike in nearly 32 years, according to the Footwear Distributors and Retailers of America (FDRA).
With the holidays around the corner, rising costs are likely to be a major concern for shoppers who hope to find shoes — as well as other gifts — this season.
A confluence of events has contributed to the rapid increase in prices, starting with skyrocketing consumer demand coupled with limited product supply.
For instance, in the footwear category, a global shortage of rubber and plastic, which are essential in the production of sneakers, has made it difficult for factories to produce enough product to meet demand, a phenomenon exacerbated by worker shortages and factory shutdowns abroad in China, Malaysia and Vietnam. Duties and import charges, including freight and insurance, rose to $3.6 billion year to date, up 36.8% versus the same first nine months of last year, which also contributed to price surges.
The FDRA estimates that consumer spending on footwear could exceed $100 billion for the first time this year, which would blow past last year’s $77.6 billion.
“While imports—a proxy for supply—are poised to rebound sharply in 2021, this rebound is unlikely to be as large as the surge in consumers’ demand for footwear,” explained FDRA chief economist Gary Raines.
Additionally, certain retailers have begun offering higher starting wages and benefits to attract and maintain talent amid a challenging hiring market — which means retailers must also raise prices to compensate for money spent on wages. Macy’s recently announced that it would boost its minimum pay to $15 per hour and launch a tuition benefit program for all U.S.-based salaried and hourly employees. At Kohl’s, hourly store, distribution center and e-commerce fulfillment center employees who work through the holidays will be eligible for a bonus of between $100 and $400. Amazon, meanwhile, bumped its average starting wage to more than $18 per hour to meet its goal of hiring 125,000 fulfillment and transportation employees, with some warehouses offering a $3,000 sign-on bonus.