pre pandemic

More

Why furniture prices are falling amid ongoing inflation

  • January 20, 2024

After skyrocketing price increases over the past few years, furniture retailers are seeing a pandemic recovery slump amid ongoing inflation. Lazzoni Modern Furniture analyzed Bureau of Labor Statistics data to see what’s behind the fall.

According to the Department of Labor, market inflation rose to 5.3% in the 12 months leading up to August 2021—it was a huge leap, considering inflation spikes had averaged around 1.7% over the prior 10 years. The pandemic wrought massive shipping and supply issues, creating supply chain disruptions. The expensive costs that manufacturers and sellers had to cover due to these supply chain disruptions—combined with the profit loss they needed to make up for—led to increased prices of goods and services, fueling high inflation.

A McKinsey & Company survey found that, by the end of 2021, most companies experiencing supply chain challenges had increased their inventories, meaning businesses spent more to stock up.

Economic challenges resulting from the pandemic heavily impacted furniture prices. Since 2019, furniture prices have seen massive changes: Prices jumped significantly in the 12 months ending October 2021 as the world grappled with the COVID-19 outbreak (12%) and, by August 2022, had outpaced the growth rate of market inflation, according to an analysis of year-to-year BLS data.

However, as the U.S. economy entered recovery in 2023, consumer spending slowed while housing prices soared, which caused a ripple effect on the housing market. Subsequently, furniture retailers experienced drops in revenue, leading companies to slash product prices to make sales.

Even as the pandemic-induced inflation has cooled, sticker shock often plagues consumers who still remember pre-pandemic prices. That’s because prices tend to be “downwardly rigid,” Mike Konczal, Roosevelt Institute’s director of macroeconomic analysis, explained to Vox, meaning companies that raise their prices don’t usually lower them again.

Lazzoni Modern Furniture
Lazzoni Modern Furniture Lazzoni Modern Furniture
Read the rest