Why are the prices of gasoline, groceries and used cars rising? Things look more expensive because they are.

You are not imagining-many items are more expensive than before. Some are a little bit, some are a lot.America is not out of control inflation The territory is now, but we will definitely see some unusually expensive consumer goods.

If you have not noticed it in your daily life, you have at least seen it in the headlines: from flight to wood to Chicken wings, The prices of many goods and services in the entire economy are higher. Some people point out that these and other price increases are worrying signs of impending inflation, believing that this situation may soon be comparable to what happened in the United States in the 1970s-the United States sees a high inflation coupled “stagflation” economy. Growth is slow and unemployment is high.

But many economists and policymakers, including the chairman of the Federal Reserve, believe that this may be temporary, and the economy may just be a little hot now. They said that as some of the bottlenecks and imbalances after the pandemic resolve on their own, it may cool down.It looks like Has begun to happen in wood. It is also worth noting that Last year we saw deflation In certain areas of the economy, this means that prices are falling, so it makes sense that they will rebound.

Nevertheless, the inflation debate will not resolve itself soon.

So what happened now?Consumer price Woke up According to the Consumer Price Index of the US Bureau of Labor Statistics, the index increased by 5% in May over the previous year. The index looks at commodity prices across the economy to understand inflation.This is an increased level We have not seen it since 2008, and we have only seen it a few times since the early 1980s. Normally, the Fed’s long-term inflation rate target is 2%, although the inflation rate has actually been below this level in recent years.

Price increased 0.6% Alone in May. This is completely different from recent history: in the years following the Great Recession, many economists have been asking themselves the question why inflation is so low.

However, perhaps more interesting than the top-line number is the content below it. Sometimes, a major price increase or decrease in a particular area can cause the overall situation to get out of control. (This is why you hear people talking about “core” inflation, that is, excluding food and energy prices. Prices may fluctuate due to factors such as weather and oil supply.) Recently, one area has caused a sensation: Second-hand car, Its price rose 7.3% in May after rising 10% in April. The price of used cars has risen by nearly 30% since last year.If you remove them from the equation The situation may be a little different.

To be sure, second-hand cars are not the only story. In the past year, the prices of many commodities have risen.Natural gas prices have risen sharply in the past year Due to many factors Including rising oil prices, Shortage of truck drivers, As people start driving and flying again, the demand has increased dramatically. At the beginning of the pandemic, gasoline prices also fell sharply, which is part of the reason why the current rise in oil prices is so jaw-dropping.

Your overall life may be a bit more expensive now

The price of what we buy is constantly changing due to various factors, from supply chain issues to our changing habits.

Of course, the pandemic means the interruption of the supply chain and habits. Suddenly, millions of Americans were trapped at home, hoarding toilet paper and cleaning grocery store shelves. We may have purchased items in the restaurant, and we tried to remake them at home using supermarket ingredients. It is becoming more and more important to update the houses that we spend a lot of time on to make them more liveable.Our needs have led to spaghetti To the sofa. Covid-19 has also caused severe damage to the supply side, as the virus spreads among employees in meat processing plants and clothing processing plants.

In order to see what happened to the prices of some commodities, we assembled our own small shopping basket.According to consumer price data, in most cases, prices have risen Nelson IQ, It tracks U.S. checkout prices from various retailers, as well as from Bureau of Labor Statistics.

After toilet paper is readily available and people stop hoarding toilet paper, its price has only increased by about 3% over last year. Staple foods such as milk and bread rose slightly by 1.6% and 1.3% respectively.

At the same time, some prices rose sharply.As mentioned earlier, the price of used cars has risen by nearly 30% due to Supply chain disruption in the new car market, Including a Global shortage Semiconductor computer chip. Due to the surge in demand for fruits during the pandemic, the prices of some fruits such as strawberries and blueberries have risen by 27% and 16%, respectively. OversupplyThe prices of agricultural products are always subject to high volatility, because there are many variables in planting and planting. reward.

The cost of kitchen and living room furniture, due to mixing Supply chain bottlenecks and demand Repairing our personal space during the pandemic has increased by about 10% since last year.Dog food prices have increased by 5%, which may be due to Adopt a large number of pets during the lock-up period. Takeaway prices have risen by 6%.

Although the price of cheese varies by type (brie down by 6% and cheddar up by 0.4%), overall, the average unit price of cheese has risen by about 4% in the past year. According to NielsenIQ, this growth reflects the fact that many people buy more high-quality cheeses at home because they cannot take them out.

With some notable exceptions, prices have actually fallen since last year.The average cost per unit of flour and yeast makes last year’s ubiquitous ingredients Homemade bread, Fell 1% and 4% respectively. This does not necessarily mean that they are becoming cheaper, but compared to the spring of 2020, people are more likely to wait for sales, by then, if people can find the staple food in stock, they will buy it regardless of the price. Similarly, the price of eggs fell by 4%. The price of hard soda, Unofficial Summer Drinks 2019, A drop of nearly 6%, which may reflect Increased choice, Everyone from Budweiser to Topo Chico is involved.

Timber Mania: Update

One of the biggest price increases this year so far has been wood. (Vox has a complete interpreter here.) In the years following the Great Depression, the timber industry was in trouble and production slowed accordingly. When Covid-19 hit, many people in the industry believed that the situation would only get worse, so they reduced production even more. For many factories and yards, economic shutdowns will not allow them to operate in any way.

Dustin Jalbert, a senior economist and timber industry expert at Fastmarkets RISI, told Vox in the spring: “They really look back and think that demand will fall, but the reality is that demand has never been released. slow.”

It turns out that many people trapped at home have the same idea for home renovation and renovation projects. They built decks, garages, and offices, and found ways to make the houses they live in 24/7 more comfortable. Other people go to find a new home, Snapped up the existing ones and started to build.

The imbalance between supply and demand has put most parts of the industry into trouble, and timber prices have soared. According to Fastmarket Random Lengths data, in the summer of 2019, the price of 1,000 board feet of lumber (1 board foot is 12x12x1 inches) produced by sawmills was around $300. In May, the same amount of wood sold for more than US$1,500 at some point.

Now the price has begun to fall, falling below $1,000. This may indicate that the supply chain is beginning to balance itself. In the face of high prices, the demand side has taken a breath, allowing some suppliers to catch up.

This is the opinion of some economists Said it might happen As some of the problems after the pandemic are resolved, the entire economy will be affected. As the supply chain normalizes, the supply side will catch up with the demand side, and in some cases, pent-up demand will also be eased. Federal Reserve Chairman Jay Powell (Jay Powell) said at a meeting: “The prices that drive inflation up come from categories that are directly affected by the pandemic recovery and economic reopening.” Press conference In June. He specifically mentioned wood: “The thinking is that due to shortages, bottlenecks, etc., such prices are rising very fast. They should stop rising, and in some cases, in some cases, they should actually fall. We are indeed in I saw this in the case of wood.”

The biggest question mark now is how long this will last

There is no denying that some prices have risen faster than in recent years; the biggest unknown now is how long this situation will last. The Fed and the White House are betting that the current level of inflation is temporary, which means that as the economy rebounds from the pandemic, this is only a temporary bump, and things will soon calm down.

in witness Before Congress in June, Powell listed the factors that contributed to the recent rise in inflation, including price drops at the beginning of the pandemic, supply bottlenecks, transmission of oil and energy prices, and increased consumer spending following the reopening. “I would say that these effects are larger than we expected, and they may be more lasting than we expected, but the incoming data is very consistent with the view that these factors will weaken over time, and then inflation will Descend towards our goal,” he said.

The Personal Consumption Expenditure (PCE) price index used by the Federal Reserve as the main indicator of inflation, The increase in May was slightly lower than economists expectedThis may be a signal that the pace of price increases is slowing down. However, it is too early to say.

What some economists worry most is that the United States will repeat the mistakes of the 1970s Period of sustained high inflation This situation did not end until the Fed took drastic measures in the early 1980s and pushed the economy into recession. If inflation starts to rise, and jobs and wages do not follow, then daily necessities may become very expensive for many people. For example, in the 70s, Beef becomes super expensive. Sustained inflation will also reduce the value of savings.

Some more extreme corners even warn that the United States may experience out-of-control hyperinflation, as happened in places such as Argentina and Venezuela. Their currency values ​​are falling rapidly, and it is almost impossible for people’s salaries to keep up with soaring prices.

Among these concerns, it is important to remember that the Fed is focusing on inflation. If the economy really does not stabilize, the Fed has tools to fight it, such as raising interest rates.Fed officials Has moved up They raised the interest rate from 2024 to the expected timetable for 2023, although the forecast will always change.

Worrying about inflation is understandable—a situation where prices rise but salaries are not what the country wants to see. But is it time to start hoarding gold under the mattress? Probably not. The post-pandemic holidays you want to spend may be a bit more than you think, at least for now. The good news is that vacations in the United States are much safer than a year ago.