As inflation hits 39-year high, a search for ways to cope

MANCHESTER — Prices jumped 6.8% in November from a year earlier, bringing inflation to its highest level in 39 years, squeezing consumers and small-business owners and sounding alarms for Democrats preparing for 2022 politics.

The Labor Department reported Friday that costs are the highest since 1982 and are surging for food, energy, housing, cars and clothing.

Prices have increased due to several factors resulting from the rebound from the pandemic-caused recession, including government stimulus, historically low interest rates set by the Federal Reserve and supply shortages at factories as manufacturers are slowed by heavier-than-expected customer demand, Covid-related shutdowns and clogged ports and freight yards.

“I know how to stretch things,” Valerie Roche, a retired cook at Foxwoods Resort Casino, said Friday as she finished shopping at Stop & Shop in Manchester. “I buy cheaper meats.”

Potatoes can be frozen, large roasts can be sliced and stored and to save on gas she’ll leave her car at home and take dial-a-ride, she said.

Roche also has noticed shortages, particularly of cat food: “When you find it, you’ve got to grab it.”

Fred Carstensen, a professor of finance and economics at the Universityofconnecticut,saidhe believes inflation is “transitory,” though Federal Reserve Chairman Jerome Powell recently told Congress he would “retire that word.”

“Working out of it is going to take a little longer,” Carstensen said.

With inflation tame for decades, its sudden re-emergence is a shock to those not used to it, he said.

“A lot of people are not accustomed to seeing this pricing,” Carstensen said. “They’re hyper-sensitive and have a lack of historical awareness.”

A key factor driving up prices is rising demand for goods as consumers seek to get out of the pandemic-enforced restrictions while supplies fail to keep up because of shipping bottlenecks.

“We’ve been in lockdown two years virtually,” Carstensen said. “It’s been brutal. People so much want to get back out.”

Kimberly Moster, owner of Kimberly Boutique, a women’s clothing store in West Hartford, said consumer demand is up, with shoppers “out and about.”

“I would say more people are out and haven’t shopped in so long. They don’t want to wear their old clothing,” she said.

Sales are up over last year, but it’s an easy comparison because COVID-19 leveled retail in 2020.

“If you’re not over last year you’re in trouble,” she said.

For her business, Inflation so far has been “pretty minimal,” Moster said. Shipping costs for heavier items made of porcelain and glass are “substantially higher,” but they account for a small portion of her business, she said. Clothing, which is light, has not forced higher shipping costs, and garment prices are negotiated six months in advance and would not be noticed until the spring, Moster says.

Economic costs cut both ways, affecting employees and their bosses.

Kathleen Archer of Bloomfield, who works part-time in advertising, drives a lot for her job and is only partly reimbursed for mileage to compensate for gas, now costing about $3.50 a gallon. But she recently received a $2-an-hour pay raise after less than a year with her employer.

“There are so many jobs, that they must be competitive,” she said as she was about to post display ads at a Manchester Stop & Shop.

Employee compensation lags behind the corrosive impact of rising prices, rising 3.7% in the 12 months that ended Sept. 30, according to the U.S. Department of Labor.

If inflation persists into next year, Democrats could be forced to defend their economic policies and spending plans costing trillions of dollars. Gary Rose, a politics professor at Sacred Heart University in Fairfield, called it a “very legitimate issue.”

“The Republicans will capitalize on it,” he said.

The GOP will still have an uphill fight in a deep blue state, Rose said. “It takes a lot here in Connecticut to stage an upset, even with gas prices soaring,” he said.

Sen. Richard Blumenthal, two-term Democratic U.S. senator who will seek re-election next year, said there are few indications the economy is “broadly overheating.”

Still, he said, he’s advocated for tapping the strategic oil reserve to push down gasoline prices. And, he said, more can be done to break up bottlenecks in ports and other supply chain areas. He also said federal investigators should probe price gouging and manipulation by energy and gasoline producers.

Blumenthal defended the Build Back Better plan advanced by President Joe Biden and Democrats. The expansive program intended to broaden the social safety net would cut health care costs, particularly for prescription drugs, and child care and lower taxes for the middle class, he said.

“Opponents of Build Back Better ignore the clear cost-cutting effects,” he said,

The effects of inflation may be more visceral than political.

“Voters themselves don’t have to be economists or experts,” Rose said. “If it affects their wallets, that’s what matters.”