Surging inflation is forcing people and businesses to adapt
WASHINGTON — A warehouse worker in Tennessee is running up against price increases that far exceed her modest pay raise.
The owner of a pastry business in Massachusetts has had to reduce his product offerings and personally absorb higher costs.
A grocery chain executive in Connecticut said he’s splitting his higher costs with his suppliers so he doesn’t have to raise prices across the board.
Across the United States, in homes and in businesses, the highest inflation in a generation is heightening financial pressures and forcing people to adapt to a new reality.
The government’s report Friday that consumer prices jumped 6.8% over the past year — the highest such inflation rate in 39 years — showed that some of the largest cost spikes have been for such necessities as food, energy, housing, autos and clothing. They are goods and services that millions of Americans regularly depend upon in their daily lives.
Especially hard hit are lower-income households with little or no cash cushions. For them, the acceleration of consumer prices has negated any higher wages they may have received. The price surge has also complicated the Federal Reserve’s plans to reduce its aid for the economy and coincided with flagging public support for President Joe Biden, who has been taking steps to try to ease inflation pressures.
Fueling the jump in inflation has been a mix of factors resulting from the swift rebound from the pandemic recession: A flood of government stimulus, ultra-low rates engineered by the Fed and supply shortages at factories. Manufacturers have been slowed by heavier-than-expected customer demand, COVID-related shutdowns and overwhelmed ports and freight yards.
Employers, struggling with worker shortages, have also been raising pay, and many of them have boosted prices to offset their higher labor costs, thereby adding to inflation. The result has been price jumps for goods ranging from food and used vehicles to electronics, household furnishings and rental cars. The average price of a used vehicle rocketed nearly 28% from November 2020 to last month — to a record $29,011, according to data compiled by Edmunds.com.
The acceleration of prices, which began once the pandemic hit as Americans stuck at home flooded factories with orders for goods, has spread to services, from apartment rents and restaurant meals to medical services and entertainment. Even some retailers that built their businesses around the allure of ultra-low prices have begun boosting them.
Over the past 12 months, the costs paid by a typical American family have surged by roughly $4,000, according to calculations by Jason Furman, a Harvard economist and former Obama White House aide.
Though Americans’ overall income has also increased since the pandemic, a new poll found that far more people are noticing higher inflation than higher wages. Two-thirds say their household costs have risen since the pandemic, compared with only about a quarter who say their incomes have increased, according to the poll by The Associated Press-NORC Center for Public Affairs Research.
Among them is Karyn Dixon, who received a raise this year that hasn’t come close to covering her higher expenses. Dixon, 55, works as a materials handler at a warehouse near her home not far from Knoxville, Tennessee.
Like many companies in recent months, her employer raised workers’ pay — in her case by $1.75 an hour. Yet that’s hardly enough to keep pace with higher health insurance costs and costlier food and gas.
Pricier gas “puts a damper on things, especially when you live in a rural area,” Dixon said. “If we need anything important, we have to travel to the next town over, or Knoxville. Our options are limited.”