I was on my way to a local chapter board meeting of Junior Achievement on Friday morning and listening to business radio.  It was at that time that the Producer Price Index (PPI) for the month of November was announced as well as was the PPI for the service industry.  Just for the record, the PPI was up 0.3% for November 2022 and the Service PPI was up 0.4% for the same month.  Taken alone, I’m not so sure that those numbers mean a whole lot, but when taken in context of our economy and inflation over the past year, I believe that they have some relevance going forward for the death care profession.

Using those numbers gave the index a change in final demand year-over-year of 7.4%.  And, while that number has came down every single month since a high of 11.7% in March 2022 it is still recognized as too high an inflationary number for a good economy.  That suggests that when the Federal Reserve Board meets tomorrow and Wednesday that they will may continue their tightening of the money supply to combat inflation by 3/4 of 1% instead of a more relaxed 1/2 of 1% which has been speculated.

Producer Price Index News Release December 9, 2022

So, how will that have an effect on death care?

It’s my opinion that as these interest rates rise products and services get more expensive – simply because debt service is amplified because of the higher interest rates.  That, in turn, should lead to less sales and less profits from companies — which leads to a drop in demand of these products which finally pushes their prices down. . . . .which is the hoped for result of raising interest rates.

Tom Anderson
Funeral Director Daily

Another result of these rising interest rates in the public company market is that the less profits can lead to lower stock prices.  In today’s world, most consumers have retirement accounts and the drop in public company stock prices will be reflected in their retirement savings. . . and that leads to what some call a “Wealth effect” situation.  That situation being, if your retirement holdings are going down in value, you feel “less wealthy” and that attitude will cause one to look at spending decisions more closely.

Now, to death care —  which by its nature does not have an elastic demand — but a stable demand based on a death occurring.  If the demand is inelastic, what choice do consumers have if they want to save on death care services?

The answer to me seems fairly simple — they will select less services to reduce cost and get to a more comfortable level of spend.  What will “less services” mean to your business.  Will it be a choice of direct cremation over a traditional funeral?  Will it simply be a less costly casket over a premium casket?  Might there be a differing decision in vault selection?  Might there be a lack of a visitation?

I’ve had my license to practice funeral service funeral service for 42 years and I don’t think I’ve seen inflation move this high and this fast for this long since right when I started.  It’s an unknown as to what consumers will do if this inflation continues for some time.

What would I do if I was still operating my funeral home today?  I’m not exactly sure, but I certainly would not “cut services”.  I would continue the “Ritz-Carlton” treatment with families regardless of what selections they chose.  When this inflationary time passes, people will forget why they made the decisions they did at the time, but if you give uncompromising and incredible services. . . .they will remember that.

In the meantime, I just think that you have to understand that each family has unique circumstances as to what and why they are choosing the services that they choose.

I also think this type of economic time period that we are in magnifies the value of pre-financed preneed accounts.  Those accounts with money set aside already in place should allow families to carry out their originally intended option for disposition and services.  That cannot be stressed enough. . . . and it is a good reminder why one should always be marching forward with preneed marketing as well.

More news from the world of Death Care:  

• Oak Ridge Cemetery has varied choices.  West Milford Messenger  (NJ)
• BizBuzz:  Dubuque funeral home completes renovation. . . Biz Times (IA)
• Hoffman, Schneider, and Kitchen Funeral Home – Dubuque, IA Website
• A congressional report says financial technology companies fueled rampant PPP fraud.  Radio-cast and print article.  National Public Radio.
• The Civil War:  Embalming surgeon canvas print for sale.  Everette Collection

Enter your e-mail below to join the 3,041 others who receive Funeral Director Daily articles daily:

&