Why you should buy your Christmas presents early this year

Well, I mean, other than avoiding the stress of last-minute buying on Christmas eve.

The main reason this year is, if you buy them later, prices should be considerably higher. And, if you order online, you risk not getting them on time.

There are three main reasons why this will be the case. (Pundits will point out ten others, I am sticking with the easy ones)

1. Monetary inflation

As you may recall, we just are?still in the middle of a Pandemic. And, in order to support the economic impact of the COVID19, most governments around the World printed A LOT of money. And that money is finding its way into the economy.

Not wanting to go too deep into monetary economics, if you print more money, more money becomes available. And when you have too much of something, its relative value drops.

And that is happening pretty much to every currency out there. Misquoting Game of Thrones: Inflation is Coming.

2. Supply chain limitations

The industry is finding it hard to cope with increased demand after the slowdown of the Pandemic. Factories closed, some will not open again, others are still struggling to come back to full production. With a highly integrated supply chain as we have nowadays, coupled with the fact that for the past 3 decades everyone has been reducing stocks and adopting bad implementations of Just In Time, ramping up production becomes extremely hard.

One example is the automaker industry. Factories are closing everywhere not because of lack of demand for cars, but because they can’t source the chips they need to produce them. New car prices are going up. Used car prices as well.

Electronics, in general, are suffering from the same issues. Your new TV this Christmas may come at a higher price than you expect it.

3. Transport limitations

The same reasoning applies to other parts of the supply chain, namely transport. And, in particular, shipping.

Shipping containers have tripled in price. Container vessels are pretty much booked until the end of 2022, making any remaining capacity extremely expensive.

Sooner or later, this will trickle down to consumer prices.

Conclusion

Any of these issues, on its own, would be enough to cause an inflationary crisis.

Now, we have three of them (more, even), working together. When demand starts rising with Christmas purchasing, prices will inevitably go up.

And that gift you bought on a German website but is sourced from China may not find room in the ship that is supposed to bring it on time.