Most Americans have become used to low inflation, but all that is changing now. Although the price increases are difficult for many, most are not surprised.
Price increases are the norm
Let’s look back over the last 12-14 months. In March 2020 most of the global economy slowed to a standstill. In the retail and hospitality industry many workers were laid off, travel slowed, and cruise liners remained in port. There were massive global supply chain issues which continue to this day – all of which affect consumer pricing. The import and export of food products continues to be a challenge with a shortage of container and truckers and rates for both reaching sky-high levels. And the massive stimulus program from the federal government is in full swing – “it is likely the U.S. will print $10 trillion in less than three years.” This kind of unchecked spending makes inflation a subject on everyone’s mind.
“Price tags on consumer goods from processed meat to dishwashing products have risen by double-digit percentages from a year ago” according to Nielsen IQ. Kellog Co. maker of Frosted Flakes, Cheez-its and Pringles said that higher costs for ingredients, labor and shipping are pushing it and other food makers to raise prices. “We haven’t seen this type of inflation in many, many years” Chief Executive Officer Steve Cahillane said.”
Think of commodity prices today for copper, lumber, and energy along with rising home prices. Everything is becoming more expensive…everything is inflating. Warren Buffet, CEO of Berkshire Hathaway Inc. said during the annual meeting May 1, that “We’re raising prices, people are raising prices to us, and it’s being accepted…It’s an economy really that’s red hot, and we weren’t expecting it.”
Apple prices are up 10-20%
“Costs for apples as an example are up 10-20% depending on the variety said Mike Ferguson VP of produce and floral at Topco Associates LLC – a cooperative of more than 40 food companies including grocer Wegmans Food Markets Inc.”
The Department of Labor reported that the Consumer Price Index climbed 4.2% from April 2020 to April 2021. This index tracks the average change in prices over time for consumer goods and services. It’s the biggest jump in any 12-month period since 2008 and it represents price increases from food to cleaning products to baby products.
Consumers will look for better deals
Shoppers will find their own way to live through this inflationary period. Many consumers are changing their buying habits to cut costs by purchasing more generic and store brands. Shopping around for better deals is also common these days since many food items have seen prices rise more than 10%. Sacrifices will have to be made and eating out may become more of a luxury since most restaurants have also increased menu prices to cover costs.
