Afternoon Coffee: U.S. consumer price index rises; 2 companies scramble to meet demand for rapid COVID-19 test; Lowe’s invests in omnichannel supply chain

The U.S. economy continued an upswing after the Labor Department reported that consumer prices jumped 0.6% in July, matching June’s uptick, according to CNBC. The index rose about twice what economists expected, according to the Associated Press.

Consumer spending shot up last month as some states lifted COVID-19 restrictions. Inflation remains steady, however, as consumers prices are up just 1% over last year. Excluding the volatile prices of food and energy, July’s jump is the biggest monthly increase since January 1991, according to the Associated Press. Strategists said a one-month jump does not make a trend, and it is unlikely the Federal Reserve will adjust interest rates in response.

“The fact we saw an increase in inflation make up for weakness from earlier this year is evidence of further healing of the economy,” said Jon Hill, senior fixed income strategist at BMO to CNBC. “Eventually this will give way to a slow recovery with a likely return to low inflation. We’re going to see volatility in the month-to-month numbers as things get back on track. It’s serving as a reminder the price pressures are stabilizing. We’re going to avoid a deflationary trap.”

High demand for a rapid-response COVID-19 test

With COVID-19 cases continuing to rise in the U.S., healthcare industries and federal officials are scrambling to get rapid-response COVID-19 antigen testing supplies from two companies who received emergency approval to produce them, according to the Wall Street Journal. Rapid-response antigen tests make up a growing area of COVID-19 testing.

Quidel cannot produce enough analyzers to meet demand, while the firm Becton Dickinson is struggling to make enough tests, the two companies said. The companies are ramping up their production to try to meet the demand but face challenges with sourcing sample-collection swabs and manufacturing capacity.

As Quidel and Becton Dickinson continue ramping up production, the federal government has been given priority for the supplies while more equipment will be deployed to nursing homes.

Lowe’s to expand omnichannel supply chain

Lowe’s announced plans to expand and transform its omnichannel supply chain in the next three years, according to Supply Chain Dive. The company invested $1.7 billion into the plan that will add 50 cross dock terminals, seven bulk distribution centers and four e-commerce fulfillment centers in the next year and a half.

The addition of these warehouses will move the company away from a store-based home delivery model. New investments will reduce the number of touchpoints, lowering the chance of damaged goods and decreasing mileage, according to the article. Lowe’s said it will be able to reach nearly 100% of customers with two-day delivery with all its new investments.

"Now we can actually route deliveries based on market utilization," Don Frieson, the EVP of supply chain at Lowe’s, told Supply Chain Dive. "We get the benefit of a flexible fulfillment network."

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