Surging inflation is forcing people and businesses to adapt
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 percent 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.
Stew Leonard Jr., who is president and CEO of a familyowned supermarket chain based in Connecticut and New York founded by his father, said that by sharing his higher costs with his suppliers, he’s managing to avoid raising prices drastically on his customers.
“We are absorbing a lot of costs,” Leonard said. “We are trying to hold our prices low, and we will get through it and see where it goes. It’s a very erratic market right now.”
His chain is avoiding raising prices for such staples as milk, butter and eggs. But it’s charging more for more discretionary items like lobster and filet mignon. A pound of lobster has gone from $8 to $11.
Though some of Leonard’s customers are still buying those pricier items, lower-income shoppers are trading down from beef to chicken and from blueberries to bananas.
Especially hard hit are lowerincome 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 heavierthan-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 percent 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.