Let's Talk About Inflation

Let's Talk About Inflation

We've been getting more and more question about inflation, especially about how it impacts our forecast numbers. Inflation hits pro AV both in the form of price increases and in the form of an economic headwind. On net, pro AV does not suffer to substantial an impact from inflation.

Before we describe that in detail, it's worth a quick look at what inflation actually is: A general increase in prices. In terms of measurement, there are categories of goods that each have a price change and a weight reflecting what percent of a consumer's money is spent on that category. For the U.S. numbers, you can look at those change numbers and importance weights here.

Pro AV is not the overall economy; it's a category. So the overall inflation numbers don't apply to pro AV. Instead, we directly measure prices in our foundational data-gathering, then model by category.  FYI, pro AV prices over the last year have been flatter than inflation overall.  

Overall inflation does matter to pro AV though because it affects the economy overall. Central banks are responsible for controlling inflation, and they do that by applying brakes to the economy.  This is why GDP forecasts for 2022 have decreased since initial guesses last year.  The cloudier GDP outlook does reduce our projected AV growth. However, currently pro AV benefits from the return to in person. That in-person return tailwind is stronger than the inflation headwind, so we still project substantial pro AV growth in 2022.

In short, inflation isn't too directly impactful to pro AV. In terms of actual price change, pro AV sees less than the economy overall. In terms of economic headwind, pro AV feels it but is buoyed enough by the return to in-person to maintain historic growth anyways.

Please sign in

If you are a registered user on AVIXA Xchange, please sign in