Higher prices continue to plague consumers – North Platte Bulletin

0
6
higher-prices-continue-to-plague-consumers-–-north-platte-bulletin
Higher prices continue to plague consumers – North Platte Bulletin

Not everyone benefitted from the massive government stimulus plans. Many shoppers slowly walk the aisles of stores, staring at prices, pondering what to buy.

Prices continue to soar higher for most all goods and services, forcing shoppers to look harder for the best values and cut out the frills.

People are coping as best they can. One Bulletin reader told us they are eating more wild game to save on the costs of food.

“We buy only what we can’t do without, Deb Hall of Arnold said. “The price of groceries and gas to get to work are hitting us the hardest.”

“The grocery budget for a family of five is astronomical,” Kristine Wright of North Platte said.

Wright

“I’m retired and even though we get a cost-of-living adjustment every year, it doesn’t even come close, said Randy Speltz. “I’m careful what I buy and am always looking for deals.”

Speltz

A small business owner said they raised their prices a year ago to keep up, but the costs of supplies have continued to increase, pretty much eating up their profits already.

Another said they were shocked that the price of a dozen eggs and a gallon of orange juice jumped about $2 after Christmas.

“Yikes!” he said.

Easy money

Massive amounts of federal stimulus money, coupled with a boom associated with easing COVID restrictions, generated a surge in prices like the nation hasn’t seen since the late 1970s to early 1980s.

Savvy economists could see it coming. Professional market watcher William Watts forecasted it in 2021, sayin it would be “the biggest inflation scare in 40 years.”

When people have more money, they spend more freely. Retailers and manufacturers increase their prices, which may be in short supply. People continue to buy products, which starts a competitive race to the top prices that consumers will bear.

Inflation jumped 7% in 2021 and 7.1% in 2022. That means that average prices are up up nearly 15%, with some going much higher. Supply chain troubles compounded the problems. Some costs doubled, or more.

Harsh weather damaged crops, such as oranges, in the south. Avian flu outbreaks caused large numbers of chickens to be exterminated. Thus, the prices of eggs and orange juice are a lot higher.

To slow the rate of inflation, the Federal Reserve has raised interest rates, so people can no longer borrow money at nearly no cost. That is intended to slow down the demand for goods and cool the hot asking prices.

The Federal Reserve hopes that higher interest rates will slow down consumption, and prices will stop shooting up.

But the higher interest rates have a negative effect — heartburn for borrowers.

For home and business owners, the whammy is worse because the price of natural gas is significantly higher.

Northwestern Energy, the natural gas provider for the north central states, tells customers that it was the extreme cold weather, not of this year but in 2021, that was extra costly.

In February 2021, natural gas demand skyrocketed in Texas and nearby southern states to keep plumbing thawed. Water pipes in the south are not buried as deeply in the ground as in Nebraska, because the weather doesn’t get as cold.

But the cold snap in February 2021 pushed bitter Arctic winds far south. Even utility companies had to shut down because of frozen plumbing.

These days, consumers across Nebraska and the Dakotas are paying an extra charge on their bills to cover the costs of rushing more natural gas to the south.

Northwestern Energy expects the extra gas charge to end in mid-summer.

However, cold weather at the end of December also means higher bills for property owners, who pass those costs on to consumers as much as possible.

Biggest jump in years

The increase in the rate of inflation is more shocking because it comes on the heels of 21 years of relatively low inflation.

Since 1991, the annual inflation rate in the U.S. has seldom surpassed 3%, according to an analysis on “The Balance Money” website, which provides practical advice on managing money.

Advisor’s view

Marc Werkmiester of North Platte’s Professional Financial Advisors said analysts generally categorize inflation in two types – sticky and flexible.

Prices for such things as food and gas are flexible, often going up and down. Werkmeister said those prices appear to have peaked and could go lower.

On the other hand, prices for such “sticky” things as medical services and insurance do not seem to have peaked yet.

Werkmeister said inflation started with the abundance of federal stimulus money that was printed during and after the COVID-19 crisis, which gave states, schools, cites, counties, organizations, businesses and consumers more to spend, but COVID also ushered supply shortages – the so-called “supply chain” issues. There was more money in hand to pay higher prices for supplies that were in short supply.

That launched this round of inflation, he said.

He said the elderly on fixed incomes are feeling ongoing pressure on their pocketbooks. While the rate of increase is getting better, it is still high, but there is cause for hope. Werkmeister is hopeful inflation will level out by the end of the year.

He said a sound retirement investment plan guards against inflation risks as well as changing market prices. PFA is happy to help people develop those kinds of plans.

(This report was first published in the Bulletin’s Jan. 11 print edition. You can subscribe from the upper right corner of this website. The cost is just $38 / year in Lincoln County.)

© 2023 The North Platte Bulletin. All rights reserved.