Real inflation

One thing I noticed in creating POs and placing orders for science kit components is that we’re experiencing serious inflation. Dollar-wise, most of my orders are to wholesalers, which generally post a price list for a calendar year and then honor those prices all year long. (I wonder how much longer that’ll last).Those orders reflected zero inflation, but of course the reality is that I’m overpaying early in the year and underpaying late in the year.

But for some smaller items it doesn’t make sense to set up an account with a wholesaler. For example, I order Sharpie markers by the dozen from a retailer. Since my last order, the price has increased from $8.76 per dozen to $8.92. That’s only about 2%, but other items are considerably higher. For example, the last time I ordered composition books from Costco, I paid $1.26 each. This time, they were $1.33 each, or a 5.6% increase.

And a lot of vendors are playing games with quantity discounts. For example, last time I ordered three dozen of one item at $0.60 each. The price dropped to $0.50 each on quantity eight dozen, and $0.40 each on quantity 50 dozen. Now, the same item is priced at $0.70 each for under eight dozen, $0.60 each for eight dozen or more, and $0.50 each for 100 dozen or more. I ordered eight dozen this time at $0.60 each, so technically the price remained the same. (Oddly, this time the shipping was actually one cent less, even through I was ordering eight dozen instead of three dozen.) But the reality is that if I’d ordered the same number, my price would have increased from $0.60 to $0.70 each, or about 16.7%.

I’m told that food prices are rising even faster, but Barbara and I don’t track those.

 

14 thoughts on “Real inflation”

  1. Which raises the question, how long can you go without raising your own prices, and how much (and often) do you raise them? It sounds like you might need to be as flexible as your suppliers.

  2. I can probably hold prices for the rest of 2011, as volume starts to ramp up. For example, earlier today I ordered five dozen beakers from one of my primary vendors. I can order equivalent product from another of my wholesalers at a lower unit cost, but the minimum order is a case of 288, and delivery time is typically 45 to 60 days versus a week from the first wholesaler. As I said, most of my costs are from wholesalers who publish annual price lists, although I did just notice that the one who sells in case-loads only just issued a July price list, so they’ve already gone to increasing prices every six months.

  3. Real life food price tracking. I buy top round roast to cut up into chunks for my dog’s raw food diet. The local grocery regularly put that on sale for $2.99/lb. Now the sale price is $3.99/lb, an increase of WTF%

  4. I may have mentioned a few weeks ago: a German newspaper (for whatever weird reason) did a survey of American food products and their pricing. They found that many, many products had unchanged prices, but the packages contained up to 30% less product than a year ago.

    The officially reported inflation rate in the US is 3.6%, but the real, hit-you-in-the-wallet rate is clearly much higher. This is, of course, a direct consequence of the devaluation of the dollar due to current US monetary policy.

  5. I run a one-man post-retirement business selling electronic kits to my fellow radio amateurs.

    Within the last year, I’ve seen a major cost increase in certain components. One example is an RF choke that went from 61 cents in February to over $2 in June. One particular amplifier I sell uses 5 of these, and another uses 4, so this represents a major cost increase.

    Jack

  6. Ever looked inside a box of crackers lately. The individual wrapped stacks, typically 4 in a box, were always filled. Now the tubes are only about 80% filled yet the box is the same size. Same with cereal. Boxes same size, contents inside much less.

    Or sugar which my wife buys a lot for her world famous (well at least in Oliver Springs High School) chocolate chip cookies. Used to get a 5 pound package. Now it is only 4 pounds but the same price.

  7. Electronic kits? Would you mind posting a link to your site and/or some of the big names? I was always interested in electronics as a kid.

    (Greg the frustrated electrical engineer wannabe.)

  8. >>Ever looked inside a box of crackers lately.<<

    Crackers, my ass. Seen a box of Girl Scout Cookies lately?

  9. My web site is http://www.cliftonlaboratories.com – there’s a link to current kits on the main page.

    Elecraft (www.elecraft.com) still makes a kit transceiver, the K2, almost all through hole parts. However, Elecraft’s new product, the K3, is all surface mount and the kit form is really a screwdriver kit — all the PCBs are assembled and tested and the builder puts the sheet metal together and installs the assembled PCBs. It’s not practical for home assembly of state-of-the-art surface mount parts as highly specialized tools are needed.

    The electronic kit market these days is of mostly of interest to radio hams or shortwave listeners, with a few audio kits and test equipment kits around. The general kit market is a shadow of what it was in the heyday of Heathkit and Eico to mention but two.

    Jack

  10. Orange juice was sold in 64 oz cartons. Sometime last year, the package size remained the same but the contents are now 59 (or is it 57?) ounces.

    Jack

  11. “The electronic kit market these days is of mostly of interest to radio hams or shortwave listeners, with a few audio kits and test equipment kits around. The general kit market is a shadow of what it was in the heyday of Heathkit and Eico to mention but two.”

    Yeah, back in the Sixties my parents gave me a chemistry kit, and later another chemistry kit that my brother hadn’t wanted and a Philips electronics experiment kit consisting of various components like transistors, diodes, capacitors, resisters and so on which were clipped onto a particle board and run from a battery. Various circuits were provided. I know which of the three I liked most. Interestingly, the chemistry kits came with an asbestos mat and a Bunsen burner, which I connected to the stove. It was fun but not as good as the electronics kit.

    (Greg the wannabe electrical engineer.)

  12. The Democrats pushed through three minimum wage increases when they took the House in Jan 2007. From http://www.dol.gov/compliance/topics/wages-minimum-wage.htm , “The federal minimum wage for covered, nonexempt employees is $5.85 per hour effective July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009.”. The previous min wage was $5.15.

    That is a 41% increase in the min wage price. Those prices are rippling through the economy like a bulldozer. Many previously employed min wage people got laid off instead of getting a pay raise. Otherwise their employers are passing along their costs to their customers, us.

  13. It’s always been obvious to anyone who cared to think about it that the minimum wage is not for the benefit of those who earn minimum wage. It’s for the benefit of union members, most of whom are grossly overpaid, because it provides an artificial floor on hourly wages.

    Getting rid of minimum wage, along with all of the other wage and hour laws, would hugely benefit the economy, particularly if they simultaneously got rid of unemployment benefits and welfare. If people had to work if they wanted to eat, things would be a lot better. Domestic service would become popular again.

    That said, I would never employ anyone at minimum wage. I don’t want the kind of person that kind of money buys. I asked Kim recently how much Jasmine was earning for her job at the YMCA. Kim said Jas was being paid just over minimum wage, something like $7.75/hour. I told Kim that I didn’t need help this summer, but next summer, depending on how kit sales do, I might be interested in hiring Jas for a full-time summer job. I wouldn’t provide benefits, but Jas is already covered under her mom’s medical insurance. But I would pay Jas $10 or $12/hour, because I know how hard Jas works.

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