Increased Buying Power Fuels Cost Hikes, Overloads Supply Chain

Despite the continued tolls of the 2-year-old pandemic, U.S. consumers’ increased buying power is straining supply chains worldwide and leading to the ongoing surge in prices, according to a Tuesday (Dec. 21) Wall Street Journal report.

Based on early output assessments from the Federal Reserve Bank of Atlanta, U.S. economic output is on pace to grow by more than 7% annualized in the last quarter of 2021, an increase of about 2% in the last quarter.

Major U.S. ports are handling almost 20% more container volume in 2021 as compared to 2019, according to the report.

In response to supply chain bottlenecks, major retailers, including Walmart and Amazon, have taken proactive measures to ensure that goods are available for customers.

Last month, Amazon nearly doubled the number of its fulfillment centers to more than 930 facilities across the country to ensure holiday delivery of items, as PYMNTS reported. The eCommerce giant opened upwards of 450 new centers nationwide to process and ship goods, according to logistics consultant MWPVL International.

Related news: Amazon Doubles Fulfillment Network to Fast-Track Holiday Delivery

Meanwhile, Walmart last month began renting a pop-up yard near the ports of Los Angeles and Long Beach to increase the amount of incoming goods.

The retail giant handles more than 500 containers a day and uses the port to hold loaded and empty containers. In addition, the company hired 50,000 additional supply chain staff to address any obstacles that might arise, PYMNTS reported.

See more: Walmart Combats Supply Chain Issues With Rented Space Near Major Ports

Underlining the ongoing impacts of inflation, in November wholesale prices surged 9.6% as compared to the same time last year, marking the biggest year-to-year increase on record.

Demand for goods increased 1.2% in November, a slight decrease from the 1.3% boost in October. Consumer prices are skyrocketing at the fastest pace in close to 40 years, and core inflation is surging faster than it has in nearly 30 years.

More details: Wholesale Prices Make Fastest Jump on Record in November