The home improvement world has been frustrating for homeowners and commercial businesses alike as supplies and prices have continued to rise during the pandemic. When it comes to paint, supply just isn’t meeting the current demand in Arizona and the rest of the country.
It’s a perfect storm, everything from supply chain issues, raw material, transportation costs, and a recent surge in people looking to jump into home improvement projects along with home sales at a 14 year high, have compounded into higher costs and paint scarcity.
This isn’t just happening in Arizona, it’s become a national issue, as paint stores and painting contractors including us are seeing manufacturers increase prices multiple times with no sign of stopping, at least in the short term.
At the same time as demand for paint has surged, we`ve also seen shortages of critical ingredients like petroleum putting pressure on production costs and raw material supply sending manufacturer costs to surge, which they then pass on to the retailer.
Due to the current climate, it’s currently unclear exactly how manufacturers are going to deal with the rapid rise in demand until supply chain disruptions can be minimized and raw material costs lowered. For the foreseeable future, it appears the disruptions and increased costs will persist. For how long is a hot topic of debate but even the brightest minds from economists to politicians still have no answer.
Smaller Painting Businesses Fear Being Pushed Aside
What has been felt in the industry is a sense that the smaller paint stores are feeling the pinch a lot more than major paint retailers, major manufacturers are pivoting towards larger stores with more buying power, leaving smaller businesses in fear of being left behind.
Another tactic we are seeing is major suppliers using pressure tactics with smaller stores to sell only their brand or face being cut off. Less variety of products to sell, means fewer sales and less profit, further squeezing smaller businesses out of the market, It’s a no-win situation.
Major international paint manufacturers Valsper, AkzoNobl, Axaltal, and BASF, have all increased prices twice as of late last year with Axalta and AkzoNobl announcing additional price increases in the future.
This has translated so far into an 11% increase in costs since the back end of last year, more than double the highest annual increase we have seen in over 2 decades with the average yearly increase being around 3.1%.
If You Want to Start a Painting Project, Now is The Best Time
If you are planning to renovate or redecorate our best advice is to get started sooner rather than later. The experts generally believe paint will continue to increase and remain high for what could be years to come, with now being likely the cheapest time to buy paint for some time.
Is This Transitory Inflation?
The federal reserve’s current stance on inflation is that this is only temporary “also referred to as transitory” and that some of the factors contributing to higher inflation are starting to abate, with the outlook good as we continue to push toward maximum employment.
However, the general consensus on Wall Street is that inflation will continue to increase throughout the rest of 2021 and into the first half of 2022 after which deflation will likely begin to take hold.
Vincent Andrews who is an equity analyst noted that factors such as the functioning of the global supply chain for the chemical industry will affect how inflation affects paint costs over the coming months and into next year, noting that shortages in epoxies, acrylics, certain solvents and additives are the main problems now.
As consumers the price rises we are seeing should be no surprise, we are seeing inflation in almost all areas of our lives as the world struggles to get back on track with everything from groceries to hardware being affected.
Should You Put Off Your Project?
As residential consumers have changed their spending habits due to the pandemic demand for painting jobs has been very strong. Commercial painting is also making a great recovery in recent months. This being the case, If you are thinking of getting a painting project underway now is a great time to jump in before costs increase.