F MOVEMENTS
in asset prices are like a rollercoaster ride, then in 2022 the track split in two. Share prices, which crashed at the start of the pandemic before quickly rebounding, crashed again in the first half of 2022. Prices for in-person services, such as sports tickets and public transport, were depressed for much of the pandemic but recovered steadily in 2021 and 2022.
In 2023 there will be even more price swings, many of which will appear in strange places. Their size will depend on two big factors: the depth of the economic slowdown and the duration of the war in Ukraine. Perhaps the most notable mover has been used cars. Supply-chain snafus during the pandemic led to shortages of critical components, such as chips, for new cars. That boosted demand for the used variety—prices in America spiked by more than 60% in 2021. Hot tubs are an even stranger example.
If you like omelettes, though, it is harder to find a positive spin. In the year to September 2022 eggs jumped in price by 28%, having already increased by 11% in 2021. Milk also fared poorly, with a 20% rise since the start of 2021. Both prices depend heavily on the cost of livestock feed, which has been affected by the war.
The depth of a recession and the length of the war are hard to predict. But it seems likely that the unexpected price swings of the past few years, which have affected everything from chicken wings to lumber, will continue. Which unusual item will be the next to ride the rollercoaster?This article appeared in the Finance section of the print edition of
Factor 1: How big of a market share does a corporation have. Factor 2: How much do they want to overprice whatever product they are flogging.
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