6 Things That are More Expensive Due to COVID
Prepare your wallets and look out for discount sales! We take a look at six things that Australians have paid (or are paying) more for.
Sort of. As far as supermarkets and “normal” retailers of toilet paper go, it didn’t actually get more expensive, just harder to find.
Where TP did get more expensive was online from private sellers. For example, some people were re-selling rolls online with huge price hikes. In one instance, a 32 pack of toilet paper, usually around $15, sold on eBay for $500.
The high TP demand wasn’t just felt in Australia, but in many other countries too.
There are a few reasons, but most point to two likely ones.
- People actually did need more TP as they were spending more time at home due to working / learning from home in lock down.
- The size of the product. Big packs of toilet paper take up a lot of space on supermarket shelves, especially compared to sauces, coffee and instant noodles for example. This meant when a few people took a few extra rolls, shelves appeared to be running out which caused fear. The same can be said for space in delivery trucks and pallets ‘out the back’ of supermarkets.
Car prices have been dramatically inflated thanks to COVID, in fact some popular examples are up over 30% from “normal” times.
Utes and SUVs from major brands such as Mazda, Toyota and Ford are big sellers in Australia.
In March-April 2020, prices actually plummeted – we’re talking about used cars from dealers and private sellers here – by around 14%. In fact dealers were once accepting, on average, $4,000 LESS than advertised prices.
In more recent months, that figure sits at only $153 less. In other words, buyers are only haggling dealers down $153 from the asking price.
- Public transport fears. When COVID hit, and continued to hit, many public transport commuters went for the private vehicle option which included ferrying kids to school. This put more demand on cars.
- New car production problems. Border closures, factory shutdowns, chip shortages, even aluminium scarcity, have all hampered new car production which means buyers looking for a new vehicle are opting for late models examples, again putting pressure on the market.
It’s almost impossible not to at least hear about the high prices for property in Australia. In the 3rd quarter of 2021, average house prices in Australian capital cities rose by 6.7%.
From roughly mid 2020 to mid 2021, Australia’s median property price rose by around $100,000.
The high demand has seen properties sell extremely quickly with buyers putting down massive deposits (sometimes without even arranging finance) and paying even more – much to the frustration of first home buyers.
Data from CoreLogic showed that in August 2018, there were 153,803 houses for sale nationally. In August 2021, there were just 88,872 houses for sale, a drop of more than 42%.
- Construction slowdown. A contributing reason for the higher house prices is simply supply and demand. As worksites and materials were affected by lockdowns and supply chain disruptions, the number of available homes decreased, buyers looking to move in didn’t.
- Low interest rates. These rates are at historically low levels which means more people are tempted to borrow and banks can (and do) offer lower interest rates on their products.
Game consoles, laptops, kitchen appliances, it’s a long list. All these products depend on computer chips and it’s these key components that have been in short supply.
Cars too have been affected by chip shortages.
Some TVs have seen price rises of 30% from pre-COVID times and gaming systems have also reported high prices as people rely on home entertainment during lockdowns.
The massive shift to online shopping, learning and working has seen huge demand for connected devices. Furthermore, as they become more sophisticated, the need for more processing power increases.
- Microchip shortages. Unfortunate events, like a factory fire in Japan, storms, droughts in Taiwan (chip manufacturing needs a lot of water) and increased demand have all made electronic production difficult.
- The PlayStation 5 and Xbox Series X releases (both in November 2020), along with other popular devices, coupled with more people seeking entertainment at home increased demand even further.
Unless you drive an EV, it’s always frustrating to drive past a petrol station with a low tank and see $1.79 per litre (or higher) on the signs.
If you can remember back to April-May 2020, prices for regular unleaded actually dropped below $1 per litre.
By mid 2021, they were back up nearly double that number taking the fun out of road trips and transport across the country.
Knowing how to save petrol has really helped some drivers.
- Crude oil prices. These are seeing multi-year highs around the world as counties open up and get “back on the road” with lockdowns ending. When crude oil prices are high, the refined product that is petrol is also affected.
- Oil companies, the shipping/transport industry, refineries and governments all play a role in fuel prices, for example the Australian government whacks on 43.3 cents per litre in excise tax.
At various times since the pandemic began, food prices have yo-yo’d.
- Vegetable – up 5.5%
- Fruit – up 4.7%
- Beef – up 3.6%
- Iceberg lettuce – up 40%
That’s just the tip of the iceberg (lettuce)!
Prices rise as produce becomes scarcer and/or production becomes more difficult.
- Workers. As lockdowns and border closures affected the movement of people, seasonal workers were not able to physically go to farms to pick fruits and vegetables.
- High fuel prices. This has a knock on effect for food as transporting produce from farms to factories to supermarket shelves requires fuel.
When will prices return to normal?
“Normal” or pre-COVID prices likely won’t happen for a fair while yet. For example, chip shortages which primarily affect electronics and cars aren’t expected to ease until mid 2022 at the earliest.
Luckily, there are many ways you can save money each day which can really help soften the blow.
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