Durable consumer goods prices fell steadily for the past quarter-century as ever-cheaper computing power drove consumer electronics.

China acted as a giant price depressant for American consumers. Cheap Chinese goods sold through Wal-Mart and then Amazon undercut the prices of domestic manufacturers and kept consumer price inflation down.

The cost of education and health care soared, and housing bubbled during the 2000s and then popped during the 2010s, but cheap household goods and electronics seemed a permanent fixture of the American economy.

Until 2021, that is. Consumer durables registered their biggest monthly price increase in a generation in April, preceded by the first big monthly increase in the producer price index for Chinese consumer goods.

That’s not all there was too it, to be sure. The constriction of US auto production due to the chip shortage produced a scramble for used vehicles, with wholesale prices up by half year-on-year. But something fundamental has changed, and it isn’t transitory.

China faces the same pressures from raw materials prices that afflict US manufacturers, and Chinese companies have no choice but to raise prices. The first big monthly increase in Chinese producer prices in many years hit in April, at the same that the US consumer price index for durables had its biggest four-month jump since 1980.

This isn’t transitory.

China wants to reduce its dependence on exports and consume more at home. Chinese exports to the US are running at an all-time record despite the Trump tariffs, buoying Chinese economic growth. But global inflation in raw materials prices squeezes the profit margins of Chinese manufacturers, and China wants to shift its growth model towards consumption.

So China will continue to let its currency rise, on top of the 10% appreciation against the dollar registered in the past twelve months. That will make raw materials priced in dollars cheaper for Chinese buyers, but it also will make Chinese finished goods more expensive for US consumers.

China has shifted from a source of disinflation to a source of inflation. Along with a renewed US housing bubble fed by the lowest mortgage rates in history and by chronic supply pressures; a shortage of US workers willing to accept employment; and soaring raw materials prices, this will be a continuing source of inflationary pressure for at least the next couple of years.