Shoppers are still struggling with the burden of inflation
WENDELL, Idaho (KMVT/KSVT) —The inflation rate is at a 40-year high. It unexpectedly rose again in August, despite a drop in gas prices. Over the last 12 months, inflation has risen 8.3%, and some shoppers and retailers are wondering if there is any hope in sight.
In a recent 60 Minutes interview, President Joe Biden said he is optimistic about the economy, as, “the inflation rate month to month is just up an inch” in his words. In June inflation rose 1.3 percent, but in July and August, it barely rose. In August it was .1 percent.
Even at an inch shoppers are continuing to feel the burden of inflation, as the prices for things like meat, milk, produce and other goods continue to rise. According to the Consumer Price Index the cost of food was up .8 percent in August, and 11.4 percent over the last 12 months.
“We are still seeing the increases. Maybe not as bad as four, five months ago, but we are still seeing the increase in them,” said Simerly’s manager Brent Horton.
Wendell resident Jackie Metzler said people like her are continuing to shop on a budget. like Santa Claus, she makes a list, checks it twice, and sticks to it. Additionally, she said with the price of gas she tries to shop locally and doesn’t travel as much into Twin Falls to shop at larger retailers.
“I do most of my shopping right here (Simerly’s) because it’s close,” said Metzler. “I’m not going to drive clear across the country for a better price.”
However, she still can’t believe the price of some items on the shelf. On Monday at Simerly’s a large box of Kix cereal was selling for $7.49.
“I say wow. I’m glad I don’t have four children at home,” said Metzler with a chuckle.
Horton said, “Some of them (grocery products) are [up] nickel or dime. Some of them are up as much as a $1, $1.50 increase on items. I mean there were some big jumps.”
The store manager said smaller independent grocery stores are more expensive on some items than larger retailers, because retailers like Wal-Mart, Target, and Albertson have more buying power, but it is easier for independents to stay in stock because they don’t have to buy as much.
Additionally, he said sales at Simerly’s are up from last year. He partially attributes it to prices being up, but he also said foot traffic in the store is up. He agrees with Metzler by saying customers don’t want to travel as far to find deals and are shopping locally.
University of Idaho Associate Clinical Professor of Economics Steven Peterson said, “inflation isn’t something you turn on and off like a switch, and the efforts to reduce this inflation are going to take time.”
He also said as a country “we” have been here before. In the 1980′s, the United States had historically high inflation, and interest rates then were extremely higher than they are now. According to the Federal Reserve Bank of St. Louis, interest rates in December 1980 were at 22 percent. Today they stand at 2.33 percent.
He attributes the rise in inflation and its stubbornness to many things, including historically low interest rates and the massive increase in the monetary base over the last several years. According to the Federal Reserve Bank of St. Louis, since 2008 trillions of dollars have been pumped into the monetary base. In June 2008 it was more than $840 billion. Today it is around $5.2 trillion, which is down from $6.4 billion in December 2021. Peterson said he would put most of the inflation problems on Federal Reserve Policy of which Presidential administrations have an indirect rather than direct influence.
Additionally, Peterson said President Biden’s Administration is not completely blameless for the inflation as he does bear some responsibility. It is collective blame, stretching back to at least the term of President Barack Obama. He adds, in his opinion, Jerome Powell, during Biden’s term, was initially slow to respond to the inflation spike, although he is now responding aggressively. However, he thinks the country is now heading in the right direction under the direction of Federal Reserve Chairman Jerome Powell.
“He is systematically signaling to the market he is going to raise interest rates regularly until the inflation indicators turnaround,” Peterson said.
He expects interest rates to go up as high as another percentage point in the upcoming months, so things might get worse for consumers before they get better.
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