At the pump, the grocery store, and just about anywhere, anyone who spends money has probably noticed that your dollar isn’t going as far as it was a year ago, or even a month ago.
The annual inflation rate reached 9.1% on Wednesday. According to Department of Labor data, that’s the highest since 1981. Experts say it will have significant impacts on local businesses and consumer habits.
“Inflation is the rate of increase in prices over a period of time,” said Umesh Kumar, associate professor of finance at SUNY Canton.
He said inflation generally affects items such as household appliances, vehicles, clothing, medical care and other daily consumables. Although food and energy prices are technically excluded from the effects of inflation – since they fluctuate seasonally – Mr Kumar said these prices rise with inflation because the costs of creating the item are impacted. For example, the price of meat increases because the price of grain increases. The cost of diesel fuel has a direct impact on farmers, who use tractors and equipment to harvest crops.
The cost of groceries has steadily increased over the past year.
Jackline F. Cain of Sackets Harbor while shopping at Piggly Wiggly in Watertown on Thursday said prices had “exploded in the last three or four months”.
She said that due to the price increase, she did not buy so much quantity.
“We just buy what we need for the week, that’s all,” she said.
One element stands out from her with which she saw the increase.
“Arugula used to be 2 for $4 and now one of them is $4.29, kinda crazy right?” she says.
A grocery order placed online through Walmart in Watertown on July 14, 2021 included 53 items for a total cost of $144.74. Items ordered that day included toasted sliced almonds – a 10-ounce bag for $1.98. A year later, that same item is $6.12. A pack of hamburger buns from the order that cost $2.50 last year now cost $3.34. The price of just about everything has gone up, milk, eggs and bread, although tomatoes, bananas and cucumbers have not gone up. Overall, if the same 53 items were ordered on Thursday, the total basket would total $171.08, according to Walmart’s website. That’s an 18.19% year-over-year increase.
An order placed on June 12 of this year, for 69 groceries totaling $192.57, was priced at $219.85 on Thursday, a 14% increase in just one month.
Terri L. Davis of Philadelphia was shopping at Price Chopper in Watertown on Thursday and she said she “definitely” saw a price increase.
She said she saw an increase “in all areas, meat I would say mainly, but everything is up”.
Ms Davis said she even saw a difference in the prices of pet supplies.
“I noticed the bag went up $2 or $3 over the last few months,” she said of the pet food she buys.
Mr Kumar said inflation generally affects low-income people more severely, which bodes ill for the north of the country. According to the US Census Bureau, 14.7% of the 108,051 St. Lawrence County residents counted in the last census live in poverty. In Jefferson County, 13.1% of its 116,295 residents were listed as living in poverty, and in Lewis County the census counted 11.4% of its 26,573 residents in poverty. Lewis County is tied with the national average, but St. Lawrence and Jefferson counties exceed it.
“St. Lawrence County doesn’t have a lot of high-income people,” he said, “so inflation will have long-term adverse effects on our way of life and our economy, I’m sure. am afraid.
Charles R. Fenner, a professor in SUNY Canton’s management program, said the fixed-income poor in particular are hurt by inflation.
“You have people who are affected because most of their income comes from things like Social Security, which are only adjusted periodically,” he said.
“Therefore, when food prices rise, there is no immediate adjustment for them to help with the increase.”
Social Security’s last cost-of-living adjustment was in December for January 2022 payments. The 5.9% adjustment was the largest in 40 years, but the cost of goods exceeded that sharp increase. The 2020 Social Security increase was 1.6%, according to the Social Security Administration.
It is not just individuals who will feel the consequences of inflation. Communities as a whole will also struggle, Fenner said.
“Take Canton, for example. Taxes for this year have already been set, so city and government budgets could be affected if they don’t find additional funds to pay for services,” he said. “It costs more to fill vehicles in our Canton village, which affects the ability of our government to function well.”
One of the most common responses to inflation is for the Federal Reserve to raise interest rates, which it has already done three times this year for a total of 1.5 percentage points.
Mr. Kumar and Mr. Fenner believe this is an appropriate but insufficient response to rising inflation.
“Interest rates are a primary tool in the hands of the Fed,” Kumar said. “It increases the cost of money, so people are less able to borrow it, which limits the supply.”
“But the current inflation is not coming because people have too much money,” he added. “That’s because the cost of supplies is rising around the world due to the pandemic and supply chain issues.”
“So while it is appropriate to discourage people from spending money on things that are not needed, simply raising interest rates may not help because the reason for inflation is not only in the hands of our country,” he said. Mr. Fenner agreed.
“Raising interest rates can have a big effect if done correctly, but there are other causes of inflation that setting an interest rate cannot change.”
Mr. Kumar believes that inflation will peak by next summer at around 10-11%, but will remain high for years to come.
“It will take about five years for inflation to come back down to around 2-3%, so it will be a persistent problem for our economy.” He said residents should plan accordingly around high inflation rates for the foreseeable future.
Mr. Fenner felt less prognostic. “If I could predict where inflation is going,” he said, “I would be paid a lot more money.”
In the meantime, local business owners are doing what they can to cope.
“What worries me is that, despite the increase in wages over the past few years, the rising cost of goods means that it is still difficult for people to make ends meet,” Rainbow said. L. Crabtree, owner of Nature’s Storehouse in Canton.
“I don’t know how it will be for small local businesses trying to provide quality products to the community. We try to stay optimistic and continue to serve our community as best we can. »
Ben Dixon, executive director of the St. Lawrence County Chamber of Commerce, said many business owners face rising costs in response to inflation.
“But they are reluctant to do so because of their loyalty to their customers and their community,” he said.
Those who raise prices, he said, are being pinched on both sides, as they face pushback from angry consumers as well as the higher costs of running a business.
Ultimately, Mr Dixon hopes people are understanding and supportive during this time.
“The bottom line is that it’s important for customers to understand the dynamism businesses face and continue to support our local businesses if we are to keep them.”
Watertown resident Jennifer M. Decker said the price hike has changed her buying habits.
“We don’t eat out at restaurants as much because we’re at home more, and that’s probably because we’re trying to save money on groceries and gas,” she said. “So I had to do a little more meal planning, buy things a little more in bulk, so I went to Sam’s for things like meat and cheese.”
She said she was more concerned about gas prices because she said she could reduce the grocery bill by switching from “throwing everything in the cart (that) we feel like, and no more meal planning”.
She said her family ate more pasta and burgers, cheaper meals, without a lot of sides.
Ms Decker said items such as crisps and soda, which children would like to have, have become more of a “luxury item”.
Ms. Davis said she considers herself lucky.
“I’m lucky to have a good job, and my kids are grown up and out of the house and I’m in a much better place than many,” she said. “I don’t know how people can afford to feed their families. If my boys were still living at home I would have to choose between food and something else, it just went crazy… I feel blessed and lucky because I have a good job and my kids are grown. But I feel sorry for people with young families and people who are just starting out. It must affect them much more than me.