ROCHESTER, N.Y. (WROC) — The price of everything from groceries to gas and homes is going up and that’s having an impact on family budgets.
CPA Garrett Wagner of the New York State Society of CPAs explained why prices are rising Monday during News 8 at Sunrise.
“The most basic principle of economics is supply and demand,” said Wagner. “The price for an item fluctuates based upon – is the supply going up or down and is demand going up or down. And as for the past 12 months, we’ve seen tremendous changes in both the supply and demand and it’s wreaking havoc on everyday consumers right now.”
Wagner explained that supply chain delays are creating a lack of certain items. He used the auto industry as an example. “In the auto industry the big supply chain issue they’re having is microchips that go in the new cars. They can’t produce as many new cars as they want to which is driving down the supply of new cars, which – in turn – drives up the price. It’s that basic economic principle. If you can’t produce as many cars the price goes up. Now on the flip side, used cars – the demand for used cars is increasing and the supply isn’t so that’s also driving up the price for those used cars. And then finally, the kicker, if you’ve tried to go someplace and rent a car – rental car prices are also going through the roof because if you remember about a year ago the big rental car companies were selling massive amounts of their cars because no one was renting them and they were bleeding cash. So now, as we’re all getting back out there – we’re engaging the world and we’re all going on vacations again – we want to rent a car, their supply is way down, which is driving up the price. So what started as this supply chain issue on computer chips for cars trickles all the way down into used cars as well.”
Consumers looking for relief need to be patient. “Part of it is a function of time,” Wagner said. “The other is that supply chain piece. As more and more businesses, companies, regions open up, go back to work, start doing their job again, that supply chain will start to be filled and that’s going to increase the supply and bring down demand. So, unfortunately, there’s no magic answer here. We’ve all got to be a little patient and deal with this uncomfortable increase in prices. The best thing we can do is let the economy open up, get back to work, and fill that supply chain and then prices will start to come down – knock on wood – in the future.”