There is a difference between price increases and inflation. With a price increase, the commodity that you want to purchase becomes more expensive. This is usually due to supply and demand forces that change the market price for that commodity. With inflation, all commodities cost more in the currency that has been inflated. This is also caused by supply and demand forces, but in this case those forces are acting upon the currency. The supply of currency is up, so it becomes worth less. At a certain point, this causes demand for that currency to drop, further exacerbating the inflation.
This is important when we discuss what commenter elrod had to say about ammo prices:
As for ammo, especially War Shots, we’ll never see pre-Covid prices again (I need a time machine….)
He’s right. Ammo prices have been rising. Small arms ammunition prices shot up 157% from 2000 to 2022, a period in which price increases caused by inflation climbed by 170%, meaning that in terms of other goods and services, ammo is cheaper now than it was in 2000. To illustrate the impact of rising prices, a box of 20 .223 caliber rifle rounds cost about $12 in the year 2000. Today, the same ammunition costs more than $30.
My very first handgun that I bought was a Smith and Wesson Model 59. (I’m still sorry I sold that gun) Since 9mm was not yet a popular cartridge in 1987, the ammo for it wasn’t as cheap as other calibers. I remember paying $7.50 for a box of 9mm ball. Two years later, I bought a S&W 4506 when they first came out, and was paying $8 per box of UMC .45 ball.
The price increases of ammo that were brought about by COVID were due to a supply issue created by the closing of ports, factories, and shipping facilities as a part of governments shutting down portions of the economy, and were exacerbated by a huge increase in demand that was brought about by panic buying of ammo in light of the George Floyd/Antifa/BLM civil disturbances. The double whammy of supply reduction and demand increase conspired to cause a shortage, which drove up ammo and firearms prices.
That issue has largely been corrected, and the supply issue has largely returned to normal for the mainstream cartridges. There are still shortages of off track ammo like revolver ammo, 10mm, and other calibers that are now short in supply because manufacturers are concentrating on the mainstream ammo supply. As that continues to stabilize, the sidestream ammo market prices will come down a bit.
However, I don’t think that ammo prices will ever return to where they were in January of 2020, when I was buying 9mm for $7 per box (less than I was paying in the 1980s!).
That is why I do not think the elevated ammo prices that we are seeing now have anything to do with the COVID shutdown. The prices we see now are the new floor. Thanks to the inflationary pressures of Trump and Biden (and the uniparty) running the government printing presses, the dollar is worth less. That means that the prices of everything that is sold for dollars will be higher in terms of dollar cost. That is, the new prices for ammo are caused by inflation.
In February of 2019, there were 15.45 trillion dollars in existence in the entire world. By July of 2022, there were 21.73 trillion dollars in existence- a whopping 40% increase in supply in only 2.3 years.
We know that there were less goods and services available, but there were 40 percent more dollars chasing that reduced amount of goods and services. That caused inflation. The United States is in the midst of a period of historic inflation. The average price of goods and services was up a multi-decade high of 9.1% year over year in June 2022.
Since that peak in July of 2022, the Fed has taken steps to reduce the money supply, and we now have somewhere around $20.6 trillion in circulation. We are never going to get back to $16 trillion. It isn’t possible without collapsing this house of cards our economy is built upon.
So for that reason, we are never going to see prices like February of 2020 again. Those days are gone. Enjoy your time paying $10 per 50 round box of 9mm. It will cost more as we print more money. There will come a time when we look back wistfully at $10 ammo boxes.
2 Comments
Steve · May 25, 2023 at 12:10 pm
I’m not ready to go with “never” quite yet. There are still a lot of supply shocks and demand shocks rippling through. The effects of Obama closing down the last lead smelter in the US have still not resolved at even the commodity level, let alone the retail. There was a severe shock on primers a few years back. And governments have been foolishly seeing how much ammo they can burn through in Ukraine, so all of that is going to have to be replaced before we see improvement.
So think of it as an opportunity. There’s still good money in producing decent range ammo, even with high materials prices, and most boomers I know who were doing that have retired, further reducing supply of ammo and demand for materials. Even a starter Dillon and an arrangement with your friendly local gun store can go a long ways to making decent scratch on your own terms.
Or complain about prices. Whatever suits each of all y’all’s personality best. (Not you, personally, DM. Just a reflection of my perception of some commenters. Some prefer to gripe, others to do something about it.)
Gryphon · May 26, 2023 at 4:59 pm
While everything is affected by ‘Inflation’ (that’s yiddish for the devaluation of paper money by printing more of it) Guns and Ammo are far more affected by Political Factors that distort the usual, honest ‘supply and demand’ factors in the Marketplace. IMO, the occasional “Toilet Paper Shortages” illustrate how Rumors can become spiraling appearance of Shortage/Panic Buying that drive up Prices and reduce Availability.
That said, even more so than (canned) Food, Ammo does not ‘go Bad’ in a short period of Time; I have shifted from buying additional Storeable Food with extra Funds, to Ammunition, with consideration to the best Price when I do.
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