Inflation, gas prices, tariffs squeeze consumers’ wallets
Price index rises 2.9% in June, the fastest increase in six years
The price of a can of CocaCola? Likely going up. A package of Pampers? That too. Plane tickets? They also may be more expensive. These items and more may cost more in the coming months as people start feeling the effects of higher fuel prices and raw-material costs as well as a range of tariffs.
Janette Hendricks said she has noticed higher prices on “just about everything” in the past three months or so. That’s put
pressure on the recently retired nurse. So she goes shopping less often, “makes things stretch,” and she always shops for things on sale. She said she has also considered going back to work.
“The economy is doing great, so why is everyone doing so poorly?” she asked.
The consumer price index, the government’s primary measure of
inflation, rose 2.9 percent in June from a year earlier, the fastest increase in six years. Starbucks had said in June that it had raised the price of a regular drip coffee, and McDonald’s said it raised prices when it reported its latest sales figures.
Procter & Gamble, one of the biggest makers of consumer products, had said that Pampers prices will increase by an average of 4 percent in North America, while the Bounty, Charmin and Puffs brands could see 5 percent increases.
Gas prices have already surged more than 24 percent in the past year. Rent and other housing costs were up 3.4 percent in June compared to a year earlier, and auto
insurance has jumped more than 7 percent.
Hendricks said she and her husband also drive far less as they’ve noticed gas prices on the rise. Halla Byer, 28, has also seen the cost of filling up her car go up. The recently unemployed Portland, Oregon, resident feels optimistic about opportunities in the city, but joked of higher prices “making broke people more broke.”
The Federal Reserve, which tries to keep inflation at or slightly above 2 percent, has been raising interest rates to make sure that price pressures don’t get out of hand. Though President Donald Trump has criticized the central bank for raising rates, economists expect increases again in September and perhaps December.
Some of the higher prices also come as companies react to the Trump administration’s tariffs on steel, aluminum, lumber from
Canada, and on $34 billion of imports from China. Beijing has imposed new duties on U.S. exports as well.
Overall, the aluminum and steel tariffs could cost the U.S. beverage industry nearly $348 million, according to The Beer Institute. Coca Cola has announced plans to raise prices, citing the cost of raw materials and packaging, though the impact on retailers and consumers is hard to gauge.
Rising fuel costs are prompting airlines to consider boosting ticket prices. Spot prices for jet fuel are up about 50 percent from a year ago.
American Airlines saw its second-quarter profit plunge by more than a third as spending on fuel surged, and CEO William Douglas Parker warned about rising fares. Delta Air Linesm CEO Edward H. Bastian said prices are up about 4 percent from last year.