Fireworks prices are skyrocketing, but you don’t have to worry about shortages. An economist explains.
history of The conversation through Jay L ZagorskyLecturer, Questrom School of Business, Boston University.
If you’re looking forward to launching bottle rockets and Roman candles this July 4th, I have good news and bad news.
The bad thing is that fireworks prices are skyrocketing this year along with pretty much everything else. The good news, however, is that at least you don’t have to worry about running out – there should be plenty of rockets, fountains and sparklers around.
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I’m an economist and have been following the fireworks industry for years. Despite rising wholesale prices, I believe the latest data suggests you might be able to beat inflation and snag some firework deals – if you’re patient.
Fireworks imports at record level
Fireworks were first invented in China over 2,000 years ago. Most of the world’s fireworks still come from there today.
China accounts for 87% of global fireworks exports as of 2010. Many of these are budget-friendly, mass-market products, such as firecrackers and Roman candles like those you can find at your local firework shop.
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In the US, ordinary people – as opposed to professional pyrotechnicians – usually set off most of the fireworks around the Fourth of July, and so companies import large quantities well in advance of the holiday to ensure a large supply.
The US imported 185 million pounds of fireworks in the first four months of 2022, mostly from China, according to the latest available data. That is already 27% more than the record pace of last year. And that doesn’t even include the numbers for May and June, the two months that usually account for the largest volumes in a typical year.
The figures include around £5.5million of fireworks for professional displays – meaning all but around 3% of these imports are for private use. The £179 million for consumers is already the equivalent of over half a pound of fireworks for every man, woman and child living in the US – and counting. For all of 2021, the US imported a record 1.25 pounds of fireworks per person.
More expensive fireworks for the sprawling public displays that cities typically host come from countries like the Netherlands, Germany, Spain, Poland and the US
American manufacturers, who produce an estimated 6.7 million pounds of fireworks a year, focus on constructing, and often helping to orchestrate, the more sophisticated rockets for large public displays.
Consumer demand is likely to fall
But there is reason to believe that consumer demand may actually be lower than usual this year.
In 2020, most public screenings have been canceled to avoid encouraging large crowds that could spread the coronavirus. As a result, Americans set off many more firecrackers in backyards and on city streets than usual — often illegally.
Public screenings began returning in 2021, and more are expected in 2022. This is leading to a surge in professional fireworks imports, although they are still well below pre-pandemic levels.
But the return of large displays is likely to reduce demand from casual users, as it’s difficult to go to a professional show and set off lots of small fireworks at the same time. And a severe drought across much of the U.S. is likely to further dampen consumer demand as officials urge cities to limit the use of fireworks to avoid starting wildfires.
RELATED: Some U.S. cities are canceling July 4 fireworks due to drought and shortages
That means prices should… go up?
Basic economics tells us that when supply is high and demand is low, prices should go down. Available data suggests otherwise, thanks to the fastest inflation in over 40 years.
Importers paid an average of $1.30 a pound for fireworks in the first four months of the year, up 15% from 2021 — or nearly double the headline inflation rate.
Unfortunately, the consumer price index does not provide detailed data on the cost people actually spend on retail fireworks. But there is data on the prices manufacturers pay for explosives, propellants and blasting accessories, which include fireworks. The latest data for May 2022 shows prices are up 11% year-on-year.
And there’s reason to believe that the amount retailers ultimately charge for fireworks will only increase further given the rising cost of shipping goods, higher insurance premiums and rising labor costs.
Be patient and stay safe
It seems likely that retailers, plagued by pandemic-related supply chain problems in everything from coins and toilet paper to baby formula and even grape nuts cereal, simply placed large firework orders as early as possible.
But I think it’s likely that this will result in a supply glut and firework retailers will be saddled with too many rockets for too little demand and may have to lower the price to lure inflation-weary consumers.
So if you’re planning on setting off firecrackers as part of your Fourth of July celebrations, there’s probably no need to stockpile them like many people stock up on toilet paper or baby food. In fact, you could benefit from waiting and taking advantage of better offers closer to July 4th.
A note of caution: use common sense when lighting your rockets and candles, especially when children are around. Thousands of people in the United States are injured, and some even die, by fireworks every year. Injuries per capita rose sharply during the pandemic after decades of decline.
It’s also wise to be aware of how fireworks affect nearby pets and take some precautions to keep them safe.
Whether you set off fireworks, watch them light up the night sky, or just hide from the noise, I wish you all a Happy Independence Day.
This article is from The conversation, an independent, non-profit news organization dedicated to spreading ideas from experts. Republished under a Creative Commons license. Read the original article here.
https://www.king5.com/article/news/nation-world/fireworks-prices-high-july-4/507-c768ffaa-2585-4069-9c39-eb66919985ab Fourth of July 2022: Price of fireworks high, but no shortage