CNBC reports that since April, 2021 the cost of essentials like groceries, utilities, and gas has increased by 20% or more, and wages have not kept up with the rapid rate of inflation.
In a healthy economy a 2-4% inflation rate is covered by wage increases. Today, although wages have been increasing, neither salaries nor government assistance can keep up with costs at the grocery store, the gas station, or utilities—all major requirements of life in the U.S.
A 2023 Gallup survey finds 58% of Americans say rising prices have caused hardship or severe hardship for their family. Look at the cost of food: At the start of 2022, a dozen large eggs cost shoppers $1.93. At the start of 2023, that carton cost $4.82—a 250% increase. Over the same period, milk is up 25%, bread is up 22%, and butter is up 33%. Utilities are skyrocketing. Fuel oil is up 40%, propane and kerosene is up 34%, piped gas, up 27% and electricity is up 12%. According to Forbes, Indiana residents are now paying roughly $423 a month for utilities—over $5,000 a year.
Meanwhile, inflation has dealt a crushing blow to families with an annual income of less than $40,000 a year. Sixty-six percent reported hardship to severe hardship. Say you have an income of $37,000 a year. After inflation over the past three years, your family has had to get by with what amounts to a $7,400.00 cut in spendable income. Americans in the middle class are getting especially squeezed says a report by the Congressional Budget Office. For them, prices have increased far faster than their income.
CNBC notes: It is clear that political considerations appeared to influence how much people say rising prices are hurting their families, with fewer Democrats (36%) than Republicans (60%) or independents (57%) reporting they have experienced hardship. However, they note, “inflation is mentioned as being the most important problem facing our nation at the highest rate since 1985.”
What most people don’t think about is that just because the rate of inflation is going down doesn’t mean we get lower prices. We are still paying for every prior inflationary increase from the past. Inflation is just a rate of increase.
A gallon of gas was $1.11 in 1993, and today the average is $3.85. It is the accumulation of inflationary increases over those years that got us to prices that are now a 247% increase from the 1993 rate. When we see a “lowered” rate of inflation, all it means is that instead of 8% it might be 7% that is being added to yesterday’s price. After another season of continued inflationary increases we could easily get to more than $5.50 for a gallon of gas. The average price in California is already $5.70, so right now 15 gallons of gas there costs $85.50.
People are having to make difficult choices, and many are wondering if economic policies are being made to benefit the people of this country (or are steaks now limited to Silicon Valley execs and those who serve in Congress?) According to Gallup pole statistics, most of the people are suffering, but the poorest among us are suffering the most.