Open your wallet.
Inflation is at its highest point in 40 years. People are paying more everywhere. Every aspect of the economy is under pressure right now, from higher food prices to rising gas prices every time you fill your tank, and everything in between.
These are the five most volatile areas where prices have risen in recent months. Experts also share their predictions for the future.
Gas prices
Gas prices fell in the early 2020s at the onset of the pandemic. However, they have rebounded in 2021 and 2022. GasBuddy data shows that the average gasoline price has doubled between April 2020 and February 12, 2018, to $3.48 per gallon.
Patrick De Haan is the head of U.S. petroleum analyses at GasBuddy. He said that higher prices are indicative of supply chain woes that have been affecting the economy. In 2020 , many oil companies reduced production as oil prices dropped and countries started implementing stay-at-home policies. People around the globe drove less in that time.
“Almost every producer cut noticeably,” De Haan said. “OPEC reduced production by a third. The U.S. reduced production by a third. It was something that nobody thought about until the vaccines offered an opportunity to reopen it.
De Haan stated that these reopenings – both in the U.S. as around the globe – have created a problem in the supply chain. More people are searching for fuel, while oil companies are producing less.
This imbalance in demand could continue. De Haan stated that it could take anywhere from six to eight months for prices to stabilize. The market could get even more chaotic if Russia responds to economic sanctions by decreasing oil output, or if a new Covid variant is introduced.
De Haan stated, “It’s all one thing.” It’s a global commodity. It doesn’t matter where you are located, what happens can have an impact.
Cars for sale
The used car market was once a place where you could find cheap vehicles. However, this is not the case anymore. CarGurus reports that the average price for a used car has risen by nearly 50 percent since June 2020.
CarGurus’ director for industry insights and analysis Kevin Roberts said that the auto industry is facing a similar problem to the fuel industry. There is increased demand, but the production is slowing down. During the pandemic, automakers shut down factories and reduced production. The number of new vehicles on dealer lot fell from 4 million in April 2019, to less than 1,000,000 in September.
Since the pandemic began, fewer commuters have used mass transit. Roberts stated that people started looking for cars after cities and economies opened up. With few new cars, buyers started to look for used cars.
Roberts stated, “It’s real life economics 101.” “Demand was high and supply constrained, so prices rose.”
Roberts stated that car rental companies are now buying pre-owned vehicles, and not just individuals or families.
The shortage of high-tech computer chips is also preventing automakers from building as many vehicles.
Roberts stated that although production may not return to pre-pandemic levels in the second half 2022, it doesn’t necessarily mean that prices will drop immediately.
“Just because production has increased doesn’t mean that we’ll return to normal,” he stated, noting that full-production will not make up the shortage of vehicles made during the pandemic. “We’ll still have to be below where we could be in new vehicle sales.”
Electricity
This winter has seen electric bills rise, with customer bills reaching record highs in New York, Newark, Jersey City, New Jersey, and other cities. The Bureau of Labor Statistics data shows that the cost of electricity increased by 10% between April 2020 and January.
Experts attribute a large portion of the rise to a rising price of natural gas. According to the Energy Information Administration , the U.S. receives about 40% of its electrical power from natural gasoline. The industry is also facing the same supply-demand constraints as the auto and gasoline industries.
The increases have been passed on by electricity companies to consumers. In fact, bills rose so much that the New York Governor Kathy Hochul demanded that Con Edison review its billing practices.
Food
You’ve probably noticed a rise in food prices if you’ve ever shopped for groceries. The NBC News grocery price tracking shows that the average cost of bacon has risen by 35% since February 2020. Ground beef prices have risen 19%, while the cost of 12 eggs has increased 23 percent.
Retailers blamed price rises on supply chain problems. This includes increased demand, decreased labor, and higher fuel prices. However, White House and Congress officials have accused producers of raising prices beyond what is necessary.
“Your company and other major grocers that reaped the benefits from a turbulent 2020 appear to be passing on costs to consumers to preserve your panademic gains and taking advantage of inflation, to add greater burdens,” Sen. Elizabeth Warren (D-Mass.) wrote in December to Kroger, Albertsons, and Publix.
Rents
Inflation has also impacted renters. Zillow’s Observed rent Index shows that rent prices have risen 18% in the United States since January 2020.
Jeff Tucker, Zillow’s senior economist, stated that much of the rise in rent prices could be attributed to an imbalance between supply and demand. As people moved out of cities, offices, theaters, and sports leagues closed, rent growth began to slow in 2020.
Many people moved away last year and others who wanted to move after living with roommates for years to compete for the same few apartments.
Tucker stated that “all of this created a perfect storm beginning in spring 2021.” That storm continues to this day.
Tucker stated that the pandemic caused a drop in gas supply and car production. However, U.S. housing stock has been squeezed for many decades.
Tucker stated that the building industry suffered a decline after 2006. It took a while to get back to normal rates. We haven’t compensated for the underbuilding deficit. This means that there isn’t enough housing for all the people who are coming to our country.
