Vitamin B12 Direct Fighting Inflation

We are pleased to announce that while rising costs are affecting virtually everything else you buy, there will be no vitamin inflation in 2022 at Vitamin B12 Direct.

True, we’ve seen our post covid-19 international postage rates to certain destinations like the US double and wholesale prices from our vendors rise year over year, yet we will hold the line on not passing vitamin b12 inflation on to you our valued customers. We understand that the world economy is rebounding from an unprecedented slow down and that supply chain management issues are affecting material costs all the way down the line but we feel a duty to resist the tide and will instead ride this out with our community of customers. As the old saying goes, this too shall pass.

I’ll note here before going forward that we have amended the free shipping promo to a free vial of vitamins. While we know free shipping was popular, the free vial actually works out to offer a more significant cost savings on the customer end and we think saving you more money is a priority as we do our best to keep costs in line.

Now that we know there won’t be any vitamin B12 inflation let’s see take a look at the numbers on inflation as it relates to everything else we buy and see if we can make sense of where this is going and where it may be heading…

According to the US Bureau of Labor Statistics:

  • Aggregate price increases for the year as of end of Nov 2021 stood at 6.8%. This is noted as being the most significant rise in costs since the end of June 1982.
  • Of all categories energy is the standout heavyweight in the room when it comes magnitude of increase having risen a whopping 33.3%
  • Food prices rose 6.1% on average and medical services were noted as seeing a 2.1% increase.

Moving Goal Posts

As we know from previous inflationary cycles there is usually a determinant factor that is isolated as being principally responsible for driving up costs.

  • The 1960’s saw a strong labor market and resulting wage inflation.
  • The 1970’s higher energy prices.

These realities were viewed as the catalysts for large spikes in consumer price index (CPI) numbers. But as we headed into the 1990’s the value of the correlation between these traditional catalysts and inflation seemed to diminish in importance.

2

In his study of Inflation across the decades Gregory Mankiw at the National Bureau of Economic Research found that the Greenspan model for central bank shepherding of the economy resulted in greater stability IE. far less volatility throughout the 1990’s. The Greenspan years saw a willingness to raise rates in response to overheated stock market conditions and bring the overall movement of the economy in line with the core objective of fiscal planners to achieve balance in inflation and output stabilization. 4

What changed. While we aren’t economists it appears from the research out there that lop-sided central bank policy in favor of stimulus vs. rate increases may well be the definitive factor. Stimulus, once a tool to modulate output and growth in response to conditions that deviate from optimal growth are being used more aggressively than in previous time periods. Again, we aren’t economists but what appears obvious is that the change may well have something to do with government debt. Debt to GDP in the US now surpasses levels at the end of WWII according to a recent report by the Congressional Research Service. The same report also goes into length as to how stimulus (printing money) helps to offset the risk of an overly leveraged economy by reducing the relative value of that debt. 5

If we go back to look at the 1990’s again we see that this measured, balanced period of fiscal management was also characterized by far lower levels of government debt. This rate moved from just over 3 trillion dollars in 1990 by orders of magnitude to over 28 trillion by 2021. 6

Apples to Oranges

When researching the topic one thing remains clear, that relative balance must always be brought back to the system, this by necessity is always the goal. As if on cue bond yields are rising as we close the year and the money supply shows signs of tightening. 7

Will inflation ease from here as should logically follow or will continued global instability affect the economy and the prices we pay for basic goods and services in unforeseen ways.

We don’t pretend to know the answers here , all we know is there won’t be any vitamin B12 inflation this time around and we’ll be seeing this through with you come what may. Wishing you all a very happy holidays and great 2022!

Footnotes:

  1. US Bureau of Labor Statistics Inflation 2021
  2. Brookings Institute – The Inflation Puzzle
  3. National Bureau of Economic Research – Gregory Mankiw
  4. IMF – Stabilizing Prices and Output
  5. Congressional Research Service – Federal Defecits, Growing Debt and the Economy in the Wake of Covid-19
  6. Public Debt of the United States 1990 – 2021
  7. US Department of the Treasury Bond rates 2021

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