Inflation threats are here and are now permeating almost every aspect of a consumer’s purchasing life. From lumber to steel and carpets, everything is rising in price.

Earlier this month, the great Warren Buffett and Charlie Munger spoke at the 2021 annual Berkshire Hathaway shareholders meeting. MHFIN did us the favor of hand-picking some key clips as they relate to inflation. The yahoo special broadcast was over 5.5 hours long…

Charlie Munger: This Inflation is “Dangerous”

After Buffett concludes his statements on inflation and how hot it is running, Charlie Munger blurts out,

“Ya, and there is one very intelligent man who thinks it’s dangerous. And, that’s just the start.”

What I found most interesting is Buffett discussing his weekly calls with store managers across the United States.

Buffett Sounds Off on Inflation Threats

Buffett sounds off during the annual meeting, following a question about inflationary pressures, he explains,

“We go over, day by day, what happened in three different stores in Chicago and Kansas City and Dallas. And, it just won’t stop. People have money in their pocket, and they pay higher prices.”

He goes on to state,

“It’s almost a buying frenzy…”

Buying frenzies tend not to last, but if prices continue to rise due to inflation, consumers will begin stockpiling perishable goods – hurting supply and further increasing prices.

Future CEO Sees Scarcity of Product Haunting Market

Towards the end, Buffett taps Berkshire Hathaway’s future CEO, Greg Abel, who concludes,

“There is a scarcity of product right now. Of certain raw materials.”

And that,

“That scarcity factor is also real out there right now.”

Just a few weeks ago, when questioned about the potential dangers of inflation, Jerome Powell, Fed Chair, was quick to respond,

“Those pressures are likely to be temporary as they are associated with the re-opening process.”

For many raw materials, inflation along with demand and supply chain issues are resulting in record-high prices. It is rare for Munger to be warning about “dangerous” inflation; while Buffett watching it very closely is enough to know their concern is real and justified. Finally, for investors and regular people living their lives, inflation threats should be factored into almost every decision moving forward.