Daily Management Review

Major US Consumer Categories That Saw Price Drop In March Due To Covid-19


Major US Consumer Categories That Saw Price Drop In March Due To Covid-19
The consumer prices in the United States dropped significantly in March, the largest drop in the give years, because of coast-to-coast shutdowns of businesses and the stay-at-home orders issued by state governments in order to curtail the spread of the novel coronavirus pandemic
According to economists, prices are likely to remain weak for  some time to come because of an expected continued lower consumer demand as more than 16 million people have been thrown out of work because of the novel coornavirus pandemic.
However, the drop in consumer demand and consequently prices was noticed to be more pronounced in some categories while prices in some categories are higher because of the quarantine efforts to curb spread of the coronavirus pandemic.
The restrictions on travel in the US have reduced demand for airlines and consequently they are operating at only a fraction of their pre-crisis capacity. National hotel chains have also been hard hit because of the pandemic. There was a 12.6 per cent drop in airline fares between February and March while there was a 7.7 per cent drop in hotel lodging costs. Both the drops were the highest since records were being kept by the Bureau of Labor Statics.
The pandemic crisis as well as a global crash in oil prices has hit the energy sector. The demand of gasoline in the US have dropped because of a drop in travel and daily commuting because of the containment measures for the novel coronavirus. Additionally, excess supply in the world oil market has resulted in the oil price drop. There was a 10.5 per cent drop in gasoline prices in the country – the highest in the last four years, while there was a 13.7 per cent drop in fuel oil prices which was the largest drop since 2008.
The coronavirus pandemic has also seen closure of major sporting events including those of the National Basketball Association, Major League Baseball and National Hockey League while stay-at-home orders resulted in suspension of youth and other amateur leagues. That resulted in 2 per cent drop in the prices sports gear which was the same drop as was recorded in November of 1982.
The closure of unessential businesses hit auto dealer showrooms which, along with the spike in unemployment, hit sale of new vehicles as such purchases were put beyond the reach of many Americans. The drop in price of new car prices in March was the highest in almost three years in March while the price drop in new light trucks was the highest since August 2009.
However there was a 0.3 per cent spike in food prices in the US in March and combined with the appreciation in prices in February, because of hoarding of food products by some consumers, the growth was the highest since 2014.
Further the price of alcoholic beverages has also risen sharply because consumers have been stocking them up due to the closure of restaurants and bars. The spike has been particularly seen in prices for wine and beer. There was a 0.9 per cent spike in price of wines – the highest since 2014, while there was 0,8 per cent rise in prices of beer.