John Pseudonym

Inflation Fears Are Overblown

>>>This means that consumers will likely cut back spending on these less essential items, which would increase the discounting activity by retailers for these products.<<<

Businesses get caught with too much inventory and must clear it out at reduced prices.

But once that excess old stock is gone, the next purchase of inventory will be at higher prices. They cannot sell the higher cost inventory for same price as the old stock they just sold through. So either the prices rise of they sell everything at a loss...

The inputs to production have risen (new price of iron ore is 100% higher than last year) and that will lead to the price of outputs of production increasing as we go forward.

We'll have lower wages and higher prices across the board a year from now.