As reported by the U.S. Bureau of Labor Statistics in early December 2021, the consumer price index rose 6.8 percent for the year. This is the largest 12-month increase since June 1982. Reports indicate that after the above-average increases of the past several months, inflation may start to moderate. Economists claim the increased inflation rate is related to the pandemic.

The pandemic created extreme swings in demand. Michel Leonard, vice president, and head of the economics and analytics department in New York for the Insurance Information Institute, says this current inflation increase is supply-driven. Materials for construction and parts for vehicle repairs continue to have strained access with the supply chain hit hard for these industries. These particular items hit insurers hard as they review insured values of properties they cover. Policyholders can also undertake the valuation exercise on their schedule of assets to ensure data is accurate and accounts for inflation.

As the economy re-opens, the national unemployment rate as of the end of November 2020 was 4.2%. This fell by 0.4% in November. These numbers are down from February-April 2020 but remain higher than the pre-COVID-19 number, 3.5%. The unemployment numbers correlate with higher labor rates in the construction and automotive industries. Supply and demand will level out as the year continues and unemployment numbers drop.

To learn more about the current conditions, you can check out this article from Business Insurance.

AdvoCap Insurance Agency, Inc. is ready to work with our insurance partners to help you evaluate your insurance needs moving forward in an ever-changing economic landscape.

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