High prices and inflation in the United States continue to rise at a historic rate, according to a report released Thursday by the Department of Labor. As Russia’s invasion of Ukraine enters its third week, global markets grapple with higher costs for energy, food and consumer goods.
In the United States, the consumer price index – the rate at which consumer goods change over time – reached 7.9% in February, an increase of 0.8% from last month. That climb set a record not seen since 1982, according to the Bureau of Labor Statistics. A higher CPI indicates that the prices of everyday goods are higher, which tells economists that inflation is likely to occur.
For Richmond residents like Shaneka Charles, inflation means higher prices for car repairs, groceries, gas and diapers for her 2-year-old daughter.
“I was trying to get diapers for my daughter and the diapers are $11 to $12,” Charles told the Richmond Times-Dispatch. “I thought it was very steep.” According to Bloomberg, the average unit price of diapers increased by 14% in January 2021 compared to the previous year.
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Charles, who works in Richmond Public Schools Nutrition Services, lives in a South Side home with her husband. She said that between record fuel prices and the recent loss of food aid benefits, she wondered how to get out of this.
“I used to get food stamps, but I got cut off because I’m making too much money now,” Charles said. “Gasoline already costs close to $5, so for parents trying to get by, by the time you buy bread and butter, you don’t have enough. It’s really ridiculous,” she said.
Grocery prices have seen double-digit increases from a year ago, according to Numerator, a data and technology company that provides market research. In February, grocery prices rose 11.5% from a year earlier, up from the previous high of 8.7% reached in January.
From February 2021 to February 2022, gas increased by 38%, electricity increased by 9%, beef increased by 16.2% and used cars increased by 41.2%, according to statistics published by the Department of Labor.
In Virginia, the average gasoline price per gallon is $4.36 as of March 11, according to the American Automobile Association. Officials say prices will continue to rise in response to the military conflict between Russia and Ukraine and other external economic trends.
For Kaitlyn Banholzer’s family of five, higher food and gas prices mean traveling less but always spending more. Banholzer lives in a home in Henrico County with her boyfriend and three children, including a 4-month-old baby.
She said she first noticed her daily expenses starting to change at the gas pump.
“My first real crazy moment was a few days ago when I filled up and it was $100,” Banholzer said. Typically, it takes around $80 to fill up your Ford Expedition. She said she was considering driving less or taking the bus because gas prices are so high.
Banholzer also got a part-time job at TJ Maxx to offset the extra expenses. In general, she is a stay-at-home mother. Her boyfriend is a mechanic and does odd jobs. Between their income, family support and government aid for material goods and groceries, it’s still not enough to get by.
“Almost anything I can do to get out of it, I do,” Banholzer said. “It’s crazy that it takes so much effort to survive, but then again, we have better than some places, so I won’t complain too much.”
Faced with rising grocery prices, many people are turning to food banks.
Rick Gliot, director of operations at Feed More, a hunger relief organization in central Virginia, says 70% of the people they interact with have a job and an income, but can’t always put food in. on the table.
He said Virginians and low-income consumer groups must make choices about stable transportation, health care, food and housing. Gliot said people generally choose housing over any other expense in life.
“People can be evicted very quickly if they don’t pay their rent. So they sacrifice everything else,” Gliot said.
Gliot said there has been an increase in recent months in the number of people visiting Feed More pantries. The organization’s network numbers more than 270. On average, about 165,000 Central Virginians – 11% of the state’s population – visit one of Feed More’s food distributions; that number increased by 10% to 15%, Gliot said.
“We attribute this mostly to food becoming more expensive and these are the choices people have to make to survive,” Gliot said. “We expect this to continue as gasoline gets more expensive, we think people will start visiting our pantries a bit more than they have in the last two months.”
He said Feed More could only address one need – food insecurity – although families still struggle with issues such as housing insecurity and unequal opportunities. Inflation exacerbates these inequalities.
“When we think of things like inequality, people usually think of income inequality or wealth inequality or educational opportunity. Inflation is usually not the number one concern,” said Christopher Herrington, associate professor of economics at Virginia Commonwealth University.
Low-income consumers are more affected by inflation than other income groups. Low-income consumers pay 12.8% more for groceries than a year ago, compared to middle-income (+11.4%) and high-income (+11.1%) consumers, according to the numerator.
Asian consumers experienced the largest price increases, paying 12.4% more per grocery item than a year ago, followed by Hispanic/Latino consumers (+11.9%), Black consumers ( +11.8%) and white/Caucasian consumers (+11.3%). ), depending on the numerator.
So what is the solution ? The main tool of the US government in managing inflation is the Federal Reserve and the Central Bank. They are responsible for keeping prices stable and maximizing job production, Herrington said. He said 100% of economists expect the Federal Open Market Committee to discuss raising interest rates at their March 15-16 meetings.
Herrington said raising interest rates is like stepping on the brakes in the economy to ease inflationary pressures, but he doesn’t expect prices to change overnight.
“The Fed will likely continue to raise rates to try to get inflation under control, but monetary policy operates on a long-term horizon,” he said. “Prices are not going to go down tomorrow, it will be a slower process.”
Herrington said inflation is impacting people’s behavior, whether they’re trying to cut back on their driving habits, avoid spending so much on gas or buying a new car because their resources are now limited and they try to balance competing demands.
Greater Richmond Transit Company CEO Julie Timm said that as gas prices rose, more people decided to take the bus. The GRTC’s ongoing zero fare initiative may help ease the pressure for some families.
“There is a strong correlation between ridership and gas prices,” Timm said. “Now what does this mean for us today?”
Timm said she expects more people who are struggling to decide whether to pay for gas or groceries might change their routine and take the bus. She said transportation intersects with how households deal with financial pressure and hopes the GRTC can help relieve some of that stress.
“What’s interesting is if you look at household costs, a lot of them are also food insecure, health, education and they have to stretch their dollar so far,” said Tim. “These are all related issues that we need to address for the prosperity of our communities.”
Yet as prices continue to rise, for consumers like Charles, that means making decisions she’d rather not have to make, like removing items from her grocery cart, taking fewer trips to the groceries and save as much as she can.
“I just try to save every dollar I have,” Charles said. “There are days when I end up putting things back on the shelf and it’s really sad. Sometimes I just think, ‘How are we going to get there?’
Herrington said he hopes the Federal Reserve finds a gradual balance to avoid economic hardship as much as possible, but telling families they will face higher prices for a while is a difficult message to send.
“Inflation is not something that can be fixed quickly and bringing those prices down can be a somewhat painful process,” Herrington said. “At the heart of this is COVID inflation. This is a COVID induced recession and until you fix the underlying pandemic you are not going to fix the economic problems. »
For families in Virginia and across the United States, that means rethinking how they spend money, what they spend money on, and how to survive as inflation continues to climb.