Prices are surging – here’s what is getting more expensive
EL PASO, Texas — By now, you probably know that everything is getting more expensive. From furniture, to used cars, to uncooked beef roasts, consumer prices have grown steadily since January as the economy recovers and Americans are spending money again.
Also sending prices higher: The ongoing pandemic has complicated supply chains, limiting supply, even as demand for goods soars, according to UTEP economist Tom Fullerton.
Fullerton says all of this suggests economic performance is returning to normal, “but that also carries with it normal price levels, which are higher than what prevailed 90 days ago. And so the economy is performing better prices are moving back to their more normal levels.”
Overall, consumer prices rose 5% last month over the previous May — the biggest jump since the summer of 2008 and more than the predicted 4.7% increase.
Here’s what you need to know about how prices are changing.
Household furnishings
Thinking of buying a new couch? Maybe some new bedding? Be prepared to pay more than usual.
The household furnishings and operations prices, which includes categories such as domestic services and furniture and bedding, increased 1.3% last month. From the outset, the change doesn’t seem like much, but it marks the largest monthly increase since January 1976.
Last spring, as the pandemic brought economic chaos, sawmills closed in anticipation of a housing slump. That slump never came. Now, lumber prices are exploding as the lumber supply has tried, and failed, to keep up with demand.
Transportation
For the second-consecutive month, used car and truck prices surged. Last month, they rose 7.3%, accounting for around one-third of the overall increase in prices in May. In April, used car and truck prices rose 10%, the biggest monthly price rise since used car data was first tracked in 1953.
New cars got more expensive too, rising 1.6% in May. That’s the largest 1-month increase since October 2009.
The shift to working from home coupled with job loss last year caused auto sales to plummet. In response, many dealerships closed. While the demand for cars has returned, the supply has not. Auto plants around the world have been forced to close or limit production following a recent computer chip shortage. Now, car dealers have fewer cars on their lots. The strong demand and limited supply are continuing to send prices soaring.
Travel
Americans have been stuck at home for over a year now. But with relaxed Covid restrictions and increasing rates of vaccination, travel is returning, and people are eager to get going.
Airline fare prices continued to surge, rising 7% last month. Other forms of travel transportation continued to rise. Car and truck rentals are 12.1% more expensive, and other intercity transportation now costs 2% more.
Once you get to your destination, things aren’t as bad. Intracity transportation prices decreased 0.4% last month.
Food
If you’re planning on buying uncooked beef roasts or beef steaks at your July 4th party this year, you might want to reconsider. The price for each rose 6.4% and 4.3% respectively last month. As an alternative, you could try frankfurters, which are 1.9% cheaper than in April, or ham, which is 2.7% cheaper. Overall, meat, poultry, fish and egg prices rose 1.3% last month.
Fortunately, however, pickle prices fell 2.1%, nonalcoholic beverage prices fell 0.5% and fruit and vegetable prices overall didn’t change, so you can at least stock up on sides and drinks for your holiday celebrations.
Notoriously volatile, food prices are continuing to get more expensive in general. The cost of food increased 0.4% in May. That’s the same increase as in April.
Health
Although prices are rising, there is some good news, particularly if you need the doctor.
The medical care index, which includes items such as medicinal drugs, medical equipment and healthcare services, increased 0.9% over the last 12 months. Yes, that’s higher than the same point last year — but it’s the smallest increase since March 1941.
