Inflation Hits a New High. What Can Manufacturers Do?

A new report was just issued by the U.S. Labor Department containing the latest inflation figures, and despite significant interest rate hikes by the Federal Reserve with more promised by the end of the year, the news is worse than even the worst estimates predicted.

According to the report, prices raised 9.1% from a year ago. This is .5% higher than the 40-year high of 8.6% recorded just a month ago, and now is the single largest gain recorded since November 1981. The leading cause of the jump was gasoline, which increased 11.2% and 59.9% from this point a year ago, although unleaded gasoline fell to $4.65 from $5 a month ago. Energy prices overall rose an astounding 41.6% year over year, with electricity rising 13.7% from this point last year and natural gas rising 38.4% in the same span.

According to the White House, the main cause of these continued trends is the war in Ukraine, as well as ongoing recovery from the COVID-19 pandemic. The Federal Reserve has cited the new data as an impetus for an additional rate hike of at least 75 basis points at its next meeting at the end of the month.

At least in the short term, both the inflation itself and the Federal Reserve’s actions to mitigate it are going to hit global supply chains hard. With borrowing money becoming more costly with each hike, manufacturers will find it increasingly difficult to maintain status quo operations. For example, their ability to acquire critical inventory may cost beyond what their annual budgets are capable of funding.

One solution to mitigate this risk is searching for alternative financing options that will allow the manufacturer to still acquire the inventory while still retaining as much on-hand capital as possible. The Inventory Ownership Solutions from Partstat offer exactly this by purchasing, storing, managing, and fulfilling critical inventory for all manufacturers. Our customers use such solutions to acquire buffer stock, end-of-life last time buys, or even standard inventory orders as a hedge against long factory lead times. Once Partstat makes the purchase, we then store the inventory in our climate-controlled, industry-leading storage facilities in Orlando, FL, and ship it to our customers across the globe on a delivery schedule designed to fit their needs.

In an environment ravaged by historic inflation, using Inventory Ownership Solutions is the single best hedge a manufacturer can make to ensure long-lasting business continuity.