Illinois Chamber: Record Inflation Hurting Large And Small Businesses

By Zeta Cross, The Center Square

Businesses in Illinois are suffering from high levels of inflation.

The yearly inflation rate hit 8.5% in March – a four-decade high, according to the U.S. Department of Labor. Illinois is facing severe economic difficulties due to rising rent and gas prices, labor shortages and rising gasoline costs.

“Inflation has been a shock to the system,” Clark Kaericher, senior vice president of government affairs at the Illinois Chamber of Commerce, told The Center Square. “That is the biggest increase since December of 1981.”

Gasoline prices rose 43%

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“The cost to transport goods needed for manufacture and to sell on store shelves got substantially more expensive,” forcing businesses to raise prices, he said.

Kaericher explained that we can all clearly see increases in gas prices, but the price of everything has risen. Everybody is affected by rising inflation if they are buying goods.

“There is nothing that has gotten cheaper,” he said. “Everything has gotten more expensive, by varying degrees … but none of it by small degrees.”

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“That is the biggest-ever increase in the (yearly) price of new cars in American history,” Kaericher said.

Rent is another price increase that has been shocking. The largest annual increase in rents since 1991 is 5.1%, which means that Illinois’s rents are rising by 5.1%.

“The last time that rents increased at this rate, Marky Mark and Wilson Phillips had number one hits,” Kaericher said.

All businesses – whether small or large – are reeling from higher input costs, Kaericher said. In the meantime, labor is in short supply and costs of labor are rising.

Rising wages indicate that the wage is on the rise. Kaericher stated that this would normally be cause to celebrate.

“Businesses want to give their employees 6 and 7% raises, and in a normal year that would be fantastic,” Kaericher said. “In this year, employees are still at a loss of 2 to 3% because of the price of living.”

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He stated that while businesses take on huge expenses to pay for higher wages, employees still suffer.

“Everybody loses,” Kaericher said.

Because inputs can be more costly, businesses must increase their prices. Profits can be static, or they may lose money.

“Everything has gotten substantially more expensive,” Kaericher said.

The question is: What’s the secret? The “brutal cure” of rising interest rates, Kaericher said. Kaericher said that the Federal Reserve gradually increases interest rates incrementally to tighten spending controls. It is now a question of how high interest rates will rise before inflation can be controlled.

“The last time we have successfully combated inflation at this rate was the very painful period of the Carter presidency,” Kaericher said. “We do not want to see the return of those days.”

The chamber is telling its members to “be conservative with their forecasting” and hope for the best.

“We are hoping that this is a one-year blip in the road,” Kaericher said. “But unless you have a working crystal ball, nobody knows that for sure.”

The Center Square permission granted this syndicated version.