A shopper leaves a store recently in Southtown Center along South Scatterfield Road in Anderson. Consumer prices have risen the most in 2021 since 1990, casting a shadow over retail expectations for the upcoming holidary shopping season. Staff photo by John P. Cleary
A shopper leaves a store recently in Southtown Center along South Scatterfield Road in Anderson. Consumer prices have risen the most in 2021 since 1990, casting a shadow over retail expectations for the upcoming holidary shopping season. Staff photo by John P. Cleary
ANDERSON — A confluence of supply shortages, heightened consumer demand and concerns about pandemic-related inflation is diminishing the holiday shopping outlook for many local retailers.

Consumer prices in the United States have risen 6.2% during the last 12 months, the largest increase since 1990, according to a report released Wednesday by the Bureau of Labor Statistics. The bleak economic news is casting a shadow over retail expectations for the holiday shopping season, which many businesses count on for a significant portion of their revenues each year. Local, small sellers can be particularly vulnerable because they usually have only one location.

“For bigger (businesses) that are worried about their inflation of rent — for example, a lot of restaurants — you see they’re not able to get things or they’re being charged a lot more,” said Morgan Jackman, a makeup artist who owns a spa in Elwood. “I really feel like there’s going to be a lot of pushback from consumers.”

Jackman and other business owners gathered at Madison Park Church of God on Thursday morning to hear from Indiana Chamber of Commerce President Kevin Brinegar about various issues, including ideas for finding and retaining qualified workers and weathering the current economic storm.

“Batten down the hatches,” Brinegar told the group. “It’s going to be a bumpy ride for a while.”

The current inflationary pressures, Brinegar contended, have been exacerbated by multiple rounds of stimulus payments distributed by the federal government to assist consumers through the pandemic. But many people have used those payments either to shore up their overall finances or boost their savings instead of recirculating money into the economy. One result has been that demand has been pent up, and that has been aggravated by the recent global supply chain disruptions.

“Some economists are saying that the federal government pushed out too much money,” Brinegar said. “People have so much money, they’re demanding goods, and the supply chain has kind of ramped down, so there’s these growing pains of trying to ramp back up. Too much money pushed out from the federal government — with future debt associated to our kids and grandchildren — is the key driver of this jump in inflation that we haven’t seen for a long time.”

The BLS reported that the overall price index rose 0.9% in October alone, significantly more than many economists expected. Connected with price increases across multiple categories including food, energy, automobiles and shelter, the data is disconcerting enough on its own. But local business leaders noted that there has been no corresponding rise in wages. In fact, according to the BLS, real average hourly wages decreased 0.5% in October.

“There are plenty of jobs available, but the wages being paid aren’t on par with that kind of an increase,” said Clayton Whitson, president and CEO of the Madison County Chamber of Commerce. “As we’re heading into the holiday season, we’re not just talking about the price of Christmas gifts; we’re talking about the price of a gallon of milk. We’re talking about things, family essentials, that folks need to live and thrive, so that’s certainly a concern.”

Discretionary items — including goods and services that Jackman specializes in — could be low-hanging fruit on many people’s Christmas lists this year, but she’s tried to get ahead of those potential pitfalls by reducing some overhead expenses and encouraging regular customers to take advantage of her current discounts.

“We’ve found that in order for us to not have to raise (prices) a lot, we weren’t able to offer as deep of discounts that we were before,” Jackman said. “But I’m hoping that I’ve kind of pushed enough people into thinking that, hey, I can save that money and spread it over the holiday season. Hopefully we might see a little bit more of an increase, actually, for local vendors because they’re able to offer something in hand right away, which is what the customers want.”
© 2022 Community Newspaper Holdings, Inc.