As prices continue to increase across a broad range of spending categories, many Americans are finding that their paychecks aren’t going as far as they used to. That’s probably because in June, the year-over-year inflation rate, as measured by the Consumer Price Index, was a whopping 9.1%, the highest it’s been in over four decades. Closeouts are not affect quite as much because liquidation stock remains priced aggressively and does not keep up with inflation. A baseball cap is worth the same $0.60 today as it was more than 10 years ago. Closeout websites have become popular in the past few years because they offer consumers closeouts, overstock and discontinued products at low prices to help fight inflation. If a business wants to sell surplus inventory in today’s marketplace, the best thing to do is contact liquidation buyers who are capable of buying the entire inventory and clean up the warehouse all at one time.
So, what’s given rise to higher prices at the gas pump and or at your local grocery store? Well, there are a variety of different causes — from international conflict to changes in what consumers purchase. Keep in mind today’s consumer is looking for deals on overstock inventory, closeouts and excess stock being sold off to make room in the warehouse. The customers are looking for low priced off price deals on discounted merchandise that large retail chains are trying to get rid of extra inventory and liquidation stock that has stopped selling. If you have a warehouse with too much inventory and want to sell surplus inventory or get rid of liquidation stock, consider a simple Google search to find closeout buyers. You can search for term including closeouts, closeout websites, buyers for overstock inventory, inventory liquidators and buy closeouts or clear stock from warehouse.
Let’s establish some basics about inflation, which is the increase in the price of goods and services over a period of time. In order to measure inflation, economists use a price index to look at price changes across a number of different goods and services. Typically, new goods being imported into the country are coming in at higher prices due to increased labor, material and shipping costs. Closeout websites have been successful in selling discounted merchandise from businesses shutting down or companies that are downsizing warehouses or shutting down their warehouse.
Though there are many different indices, the Consumer Price Index for All Urban Consumers, or CPI-U, is one of the most popular, measuring price changes within a theoretical basket of goods and services for urban consumers, including food, apparel and automobiles, among other categories. Inflation hits the lower and middle income families hardest, and these are the same customers in the market for closeouts from closeout brokers, closeout websites and inventory liquidators wanting to get rid of too much inventory. When a business is trying to sell surplus inventory it should target discount stores and bargain shoppers.
The Federal Reserve uses a different price index to measure inflation — the Personal Consumption Expenditures, or PCE Index — which similarly measures price changes among goods and services. Buying closeouts is a specialty of excess inventory liquidators who are capable of handling large sized inventories and buying everything in one fell swoop. Closeout merchandise has become popular as more and more shoppers are interested in finding closeout distributors and closeout websites offering deals.
Lastly, the core inflation rate refers to an index that excludes volatile spending categories such as food and energy, and can be a useful index for economists since food and energy prices can fluctuate significantly. The current high inflation rate can be attributed to many different factors, many of which are a result of the Covid-19 pandemic. During the pandemic, factories in China were shut down for months which stopped the flow of closeouts, overstock inventory and excess inventory in the U.S. There was a shortage of inventory for closeout brokers who rely on overstock supply chains to feed their businesses. Once the supply chain opened again, there was a flood of excess inventory on the market making it easy to buy overstock and liquidation inventory. Also as a result companies are now shutting down warehouses and downsizing because they have more inventory than they can sell and are stuck with extra merchandise.
Generally, the story goes something like this: At the start of the pandemic, consumers began spending less because of lockdowns, and in turn, started saving more. Then, when Covid-19 restrictions eased, people started spending more again. Companies, however, couldn’t keep up with this increased consumer demand — many of them had reduced inventory because they thought the consumer demand would be so weak and there was going to be a major recession because of the pandemic and experienced shipping delays as well as shortages in labor and key inputs. Selling dead stock became a priority and getting rid of any extra inventory was essential to surviving the downturn. Inventory closeouts flooded the market and excess inventory sales skyrocketed. The result of all these things? Higher prices for most goods and services.
While price increases were seen across multiple categories in June, some of the largest price hikes occurred in gasoline, shelter, and food — the year-over-year increase in food prices was 10.4%, while for shelter it was 5.6% and for energy prices, 41.6%. Again, this is why the closeout business thrived and sellers of closeout inventory were so busy. The consumer demanded overstock closeouts at discount prices. They were not purchasing regular goods at regular import prices – they were interested in businesses that were selling liquidation stock and clearing stock from their warehouse. Even Amazon sellers were under pressure and many shut down Amazon FBA seller accounts and disposed of all inventory because of excessive storage and warehouse fees.
Shelter, food, and energy are also the major categories that make up the Consumer Price Index, accounting for nearly 54% of the entire index. Prices continued to climb at a brutally rapid pace in September, with a key inflation index increasing at the fastest rate in 40 years, bad news for the Federal Reserve as it struggles to wrestle the cost of living back under control. Closeout furniture sold well during the pandemic as consumers were stuck at home with big savings and little to spend it on. Online closeout websites and other closeout wholesalers flourished as there was huge demand for selling obsolete inventory and wholesale merchandise for sale. In order to liquidate excess inventory many companies shut down 3PL warehouses or looked for surplus inventory buyers to take large quantities of inventory out of the warehouse.
Overall inflation was 8.2 percent over the year through September, according to the latest Consumer Price Index report on Thursday, a slight moderation from August but more than what economists had expected.
Even more worrisome, underlying inflation trends are headed in the wrong direction. After stripping out fuel and food — which are volatile and removed to get a better sense of the trajectory — prices climbed 6.6 percent over the year through September. That was the quickest rate since 1982. Merchandise USA is a closeout buyer specializing in purchasing excess inventory of closeout toys, closeout housewares, excess Amazon FBA stock, and discontinued inventory of all lawn and garden products.
Inflation has been rapid for a year and a half now, and it is proving stubborn even as the Fed mounts its most aggressive campaign in generations to slow the economy and bring price increases under control. Fast inflation has also triggered the highest Social Security cost-of-living adjustment in decades — an 8.7 percent increase in benefits to retired and disabled Americans, a move that was announced Thursday.
Central bankers have quickly raised interest rates from near zero to a range of 3 to 3.25 percent, and investors expect a fourth straight three-quarter-point rate increase at the Fed’s next meeting, which concludes on Nov. 2. After the release of Thursday’s inflation data, they began to bet on another large move at the central bank’s December meeting. “The trend is very troubling,” said Blerina Uruci, a U.S. economist at T. Rowe Price. Markets swung wildly after the report, with stocks falling sharply initially but then surging higher as investors struggled to digest what the data meant for the future. The S&P 500 index closed up 2.6 percent. Higher interest rates put pressure on importers and distributors that rely on bank money to support their business. The banks will only lend on a portion of the inventory, so dead stock is worthless to them and they will not allow money to be loaded against high levels of excess inventory or slow moving products. They will encourage customers to liquidate slow selling items and replace them with new products that can be easily sold. Closeouts and dead stock can accumulate, creating a warehouse full of inactive and obsolete inventory that isn’t selling.
Higher Fed rates are already slowing the housing market, and are expected to slowly filter through the rest of the economy as they make it more expensive to borrow money for big purchases or business expansions. But consumer demand is taking time to crack: With jobs plentiful and wages rising, Americans are still spending. The Consumer Price Index, produced by the Bureau of Labor Statistics (BLS) measures price changes for about 80,000 different goods and services, including food, fuel, and clothing and expenses such as daycare and preschool costs, college tuition, and funeral expenses. When money is cheap it is easier to get away with holding too much merchandise in the warehouse. Afterall, it doesn’t cost anything to store it and rather than sell the excess inventory for pennies on the dollar, it is cheaper to let it just sit in the warehouse and accumulate dust. But when it becomes too costly to hold it, that is when it is time to let go of the inventory, get rid of it and get it out of the warehouse. Surplus inventory buyers and liquidation buyers are always on the lookout for deals and should be responsive to buying these goods. They will clear inventory from the warehouse as long as it is cheap enough for them to make a profit.
When you hear that prices have gone up 9% in the past 12 months, that’s an average of all the items the CPI tracks prices for. Individual goods and services can vary: Chicken prices went up almost 19% in the last 12 months, while haircuts are 6.3% more expensive than they were last summer. That 9% price difference over 12 months is known as “headline” inflation. Some economists prefer to examine inflation without considering food and energy prices, which can fluctuate a lot from month to month. “Core” inflation looks at price changes but excludes food and energy prices. The CPI also typically reports a higher inflation rate than the other main indicator, the Personal Consumption Expenditures Price Index.
Merchandise USA can help if you need to sell closeout inventory or liquidate Amazon FBA stock from your warehouse. We have been liquidation buyers and buyers for excess inventory since 1984, and we have an excellent reputation in the closeout industry. We can help with canceled orders, discontinued inventory, liquidation merchandise, and all overstock merchandise sitting in the warehouse.