Why a Little Inflation Could Be Good for the Travel Sector
Photo Credit: Norwegian Cruise Line will return to sailing to Alaska with 11 week-long voyages from Seattle beginning August 7, 2021, pending authorization from the U.S. Centers for Disease Control and Prevention. Shown here is the Norwegian Bliss "waterfront." NCL
Skift Take
Many people in the U.S. have suddenly become worried about inflation. But experts and executives say the latest price hikes are mostly "good" inflation ... at least as far as the travel sector is concerned.
When the U.S. consumer price index for April rose 4.2 percent year over year, a chorus of experts expressed concern that rising inflation could crush the green shoots of growth in the economy. But as far as the travel sector goes, a little inflation could be a good thing.
"It's critical to look beyond the headline inflation number which aggregates the price changes of many different goods and services to understand what is truly driving the index," said Seth Borko, Senior Research Analyst at Skift Research. "Looking under the hood, we find sources of both 'good' and 'bad' inflation."
The biggest driver of U.S. inflation in April was price hikes for used cars. The second core driver was the travel sector, broadly speaking. Airfares rose 10.2 percent from April 2020, the largest one-month jump since October 2011. "Lodging away from home" similarly rose 7.6 percent in costs, month over month.
But when you take a longer view, it's hard to see this recent inflation as anything but
