Ehh…sort of…Inflation started due to a mismatch in the durable goods sector right when supply chains were having problems. As areas went in and out of lockdown and people were hesitant to gather in large groups, we exchanged our desire for services for our desire for durable goods. Think of buying a Peloton (durable good) instead of a gym membership (service). This, along with stimulus money rolling in, led to a red-hot market for goods, which was fine as China was handling Covid pretty well.

Now, Omicron hits China and they’re shutting down entire cities all over again, so it’s causing demand to exceed available supply for durable goods, which is now trickling into all the things that those goods provide right as people are starting to get back to normal (along with pent up demand for certain services). Think gyms having to update equipment to get customers to sign up again, and all competing for new bikes or treadmills right when supply chains are undergoing shutdowns.

Oil did have a part to play in all of this by increasing transportation costs, but it isn’t even in the top 3 main reasons why we’re seeing inflation right now. The main one is a mismatch in our supply chains, which, ironically enough, incentivizes all those manufacturing jobs that were shipped overseas, primarily to China, to start coming back to their home markets as countries realize that this level of exposure has some serious problems that Covid made readily apparent. China, in its quest for “zero-Covid”, is actually killing its own prospects for future export-driven growth.