Inflation — the increase in consumer prices — is fast becoming a significant concern as the country moves toward a post-pandemic era.
Prices rose by 0.8 percent last month — the largest monthly jump since 2009 ― the Bureau of Labor Statistics said on Wednesday.
All sorts of things, from used cars to sewing machines, are costing more, a result of increased demand and in some cases supply chain problems.
Inflation over the last 12 months is 4.2 percent, about double the level most economists consider optimal. (Caveat: many economists consider the 12-month figure to be distorted because it compares current rates with the pandemic-depressed index of a year ago.)
Let’s take a look at how inflation is affecting your pocketbook:
What’s the overall trend?
Inflation is happening in just about every sector of the economy and in every region of the country.
“We see inflation rising every week now,” said Cara Loeys, an analyst for IRI Worldwide, which specializes in tracking prices of food and other goods sold at supermarkets and by retailers such as Walmart.
For consumers, she said, that means less buying power.
Loeys said she expects the annual rate of inflation to be 3 percent to 5 percent by the end of the year, as manufacturers faced with higher transportation and labor costs shift some of those costs to their customers. Inflation has averaged 2.4 percent a year since 1990.
What items are being hardest hit by inflation?
Of about 200 items listed in the BLS report (excluding food and energy, which we will deal with separately), here are the biggest month-to-month increases in April: car and truck rental (16.2 percent); airline fares (10.2); admission to sporting events (10.1); used cars and trucks (10); hotels and motels (8.8); other lodging away from home (7.6); public transportation (5.8); computers, peripherals, and smart home assistants (5.1); sewing machines and fabric (5); children’s footwear (4.2); and televisions (3.1).
In areas like travel and recreation higher prices reflect a surge in demand as the vaccinated world ventures out and whole areas of the economy open up. Higher prices for things like sewing machines and fabric is likely tied to people turning to — or returning to — making their own clothes during lockdown.
And the shortage of semiconductor chips has pushed up prices for everything from personal electronics to cars.
Jason Barry, an analyst at Gap Intelligence, which tracks prices for electronics and appliances nationally, said inflation is pushing up prices “across the board” for the kind of products sold in stores such as Best Buy, due to high demand and pandemic-related disruption.
“We’re not anticipating a reversal in inflation any time soon,” he said. “If you have something you need right now, go ahead and buy it, because prices are likely going up.”
Why has the market for used cars and trucks been so impacted?
The global shortage of semiconductor chips used in new autos is wreaking havoc on the industry, prompting temporary slowdowns or shutdowns in the production of new cars by Ford, GM, and other manufacturers.
Phil Greenstein executive director of the state Independent Auto Dealers Association, said lower inventories of new cars and trucks means lower inventories of used autos because fewer used cars are being traded in for new ones. The usual flow of used vehicles from car rental companies to auto sales lots has also been squeezed because rental companies have low inventories due to the slowdown in new car production, he said.
“It all trickles down,” he said. “Higher prices are due to low inventory. It’s been a very, very difficult time.”
What’s happening to food prices?
Of about 100 food items listed in the BLS report, the biggest month-to-month increases in April were: ham (5 percent); bacon (3.4); pork roasts, steak, and ribs (3.2); frankfurters (2.7); crackers and bread (2.6); oranges and tangerines (2.5); fresh sweet rolls and doughnuts (2.2); and milk (2.1).
And prices are higher in other food categories as well, from fruits and vegetables (0.8 percent) to sweets, frozen food, and snacks (0.1).
Tyson Foods, the country’s biggest meat company, recently began raising beef prices to pay for its higher supply chain costs.
And General Mills, maker of Cheerios and other products, is considering raising prices due to increased costs of grain, sugar, and other ingredients.
What about other common household items?
The prices of household cleaning products increased by 0.4 percent last month, while paper products declined by 0.1 percent.
Some of the country’s largest providers of consumer goods have recently raised prices, including Colgate-Palmolive, which sells soap, dishwashing liquid, shampoo, hair conditioner, body wash, and liquid hand wash; and Kimberly-Clark, which produces mostly paper-based consumer products, including toilet paper and diapers.
What about energy costs?
That’s somewhat of a bright spot, depending on how you heat your home. The price of home heating oil dropped by 3.2 percent, after increasing by 3.2 percent in March. But the cost of natural gas for home heating increased by 2.4 percent, and electricity increased 1.2 percent.
Gasoline decreased by 1.4 percent, after jumping 9.1 percent in March. But things changed, perhaps temporarily, this week, with the shutdown of the Colonial Pipeline, which stretches from Texas to New Jersey, due to a cyberattack. The national average price for gas jumped 8 cents to hit $3.01 on Wednesday, with motorists lining up to fill up their tanks at many gas stations in the Southeast. But Wednesday evening the company announced that it had begun resuming operations.
“It will take several days for the product delivery supply chain to return to normal,” the company said on its website. “Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the start-up period.”
In Massachusetts, the average price of gas has remained below the national average at $2.88, but that is more than 40 percent higher than a year ago when the pandemic cleared the roads and drove down gas prices.
How do these national figures compare with regional ones?
Of the nine regions, New England had the lowest month-to-month increase in inflation (0.5 percent). The largest jump occurred in the West Mountain region (1.3), followed by West Pacific (0.9). The other six regions, including all of the Midwest and South, had inflation rates of 0.7 percent or 0.8 percent.
Statistics for Boston will be released next month. The last report in April showed a monthly average rate of inflation of 0.45 percent, based mostly on higher prices for transportation (1.75 percent) and apparel (1.6).