Let’s not pretend that as small business owners and employees we don’t have to eat, drive cars or heat our homes. Rising prices hurt us because we are people … consumers … above all else.
But as businesspeople, the situation can be even worse if you happen to be in one of those businesses that use the commodities and materials experiencing record-high prices right now.
Think of food (restaurants); gasoline (businesses with fleets and delivery vehicles); and high heating costs (landlords and real-estate related businesses).
I had asked the question last week whether inflation was the real worry, rather than recession. But after digging into the question a little further, it appears that the question of high prices is more complex than simply inflation.
Last night I attended the Charles Schwab Town Hall meeting, and heard Chief Investment Strategist Liz Ann Sonders suggesting that there is a bubble taking place in commodities, spurred partly by speculators. That seems to be contributing to the rising prices of certain categories such as food and gasoline. (She mentions commodities speculation in this Wall Street Journal interview, too.)
And it does look strange. Consider this: while the prices of food and fuel have skyrocketed, the prices of some things keep coming down.
For instance, we have been very fortunate that technology keeps coming down in price, year after year. I don’t think the prices of computers and software have ever been lower. It’s not a question of inflation across the board. It’s really a matter of some things being at record highs, and others being at record lows.
That’s the topic of my column this week at the OPEN Forum. I include some interesting statistics showing just how far technology prices have come down, and I also point to a fascinating interactive chart at the New York Times showing the differences in prices for a variety of categories. Some things have gone up, and some things have gone down.
Consequently, some small businesses are being hurt more than others in the current environment. If your business happens to depend heavily on commodities — say you run a pizza shop and depend on flour and cheese — you are being hit hard. But if you are in a business that relies primarily on technology, then your costs of doing business may be low.
What do you think is happening? Weigh in with your opinion about: Technology Prices Defy Inflation (So Far)