To illustrate inflation, consider a jar of peanut butter, or perhaps a truckload of it, if you’re running a large food bank.
In 2019, Community Food Share spent about $40,000 for a truck full of peanut butter. In July, that same truckload cost $47,000, said Julia McGee, a spokeswoman for a Louisville-based food bank.
She said that while paying more for peanut butter, the food bank also paid more for shipping due to labor shortages and about $1.25 a gallon more than a year ago because of gas prices.
“In today’s market, drivers are able to set their own price,” McGee said.
Community Food Stock managed to keep the important staple on its shelves, but the organization increased the price of a product by 6.6% between August 2019 and August 2020, according to the September Consumer Price Index produced by the U.S. Department of Agriculture. Hard work.
Almost everything purchased by a person during the same period has increased in cost. Beef? up 16.6%. sauce? up 8.7%. Dining Room Furniture? up 12%. Clothes? Up 11.9%.
Blame the pandemic.
Tony Cookson, co-director, said, “The simplest explanation is that everyone is a co-director for a year and doesn’t spend as much as they normally would and now we all made the decision at the same time.” that we want to spend money on things.” Research Center on Consumer Financial Decision Making at the University of Colorado Boulder. “When we all decide to do this at the same time, the point is, the economy needs to provide those goods for all of us. We don’t have an unlimited capacity to do that.”
Rising prices have made people worried about their household budgets, and their economists are debating how much inflation will happen before prices level out. The Consumer Report, released on September 14, showed that the index for all goods increased by 5.3% between August 2020 and August 2021.
But economists noted that rising cost of living has slowed so much since July, meaning things were still more expensive but prices were not rising as rapidly as in the previous month.
Last month, Federal Reserve officials predicted inflation would continue through 2021 and then slow next year as the pandemic progresses.
In the Denver area, the cost of all goods increased by 3.5% in July, according to the Bureau of Labor Statistics. Energy prices, including gasoline, rose the most in 12 months, jumping 24.3%. AAA reported Wednesday that the average price for a gallon of regular gas in Colorado was $3.55, compared to $2.82 a year earlier.
According to the Bureau of Labor Statistics report, food prices increased by 2.6% and the cost of everything else rose 2.4% over the previous year, compared with July 2020 to July 2021.
When gas prices rise, it affects everything.
“Even the apples you pick up at your supermarket have some energy cost because a truck has to transport it to your grocery store,” Cookson said.
On community food share, the effect of inflation is two-pronged.
The Food Bank works with 40 non-profit organizations in Boulder and Broomfield counties. It gets most of its food through donations, but the agency also buys food directly from manufacturers, McGee said. However, the pandemic wrecked supply chains and grocery stores had less to donate, forcing the community food stock to double the amount of food they bought directly. He said that in this year’s budget, food worth more than one million pounds will be bought.
Not only does it cost more to buy food in stock pantries, but more people need help keeping groceries in their homes.
“The skyrocketing prices coupled with inflation pushes many people over the edge to get the help they need in the first place,” McGee said.
Mac Close, a finance professor at the University of Denver’s Daniels College of Business, said the United States has experienced relatively low inflation over the past five years, but the trend changed so rapidly in the past year that people took notice.
“It is noticeable at the grocery store. It is noticeable at the gas pump. It is noticeable to service providers,” Claus said.
When the state closed restaurants, malls and movie theaters at the start of the pandemic in March 2020, people stopped spending money. And they were slow to loosen their pockets. Meanwhile, families received economic stimulus payments, even though they remained employed. For many, this resulted in thick bank accounts.
So when vaccines became common and COVID-19 cases appeared to be declining, people were ready to spend. But there weren’t enough new cars, bedroom furniture and clothes.
“It takes a while for supply to catch up to demand,” Claus said. “When demand exceeds supply you get rising prices.”
The pandemic created a strange economic crisis, he said. On one hand, lakhs of people lost their jobs and were dependent on unemployment to meet their needs. On the other hand, people kept their jobs but cut spending by skipping holidays, concerts and sporting events while receiving federal stimulus payments. Those people saw their bank accounts grow.
But at some point, that extra cash will run out and demand for new TVs, furniture, and clothing will drop. At that point, prices should remain stable, Klaus said.
But economists are not sure when that will happen.
“It will take some time for everything to shake. The economy may not return immediately in 2019 and the first half of 2020. This is going to take some time and, unfortunately, there is a second uncertainty of what will happen with COVID. This forecast and Makes planning more difficult,” Clause said.
Meanwhile, people struggling to pay bills will find ways to meet their needs.
McGee said she recently met a retired, stay-at-home woman who receives food through one of her senior programs. She told McGee that she was saving her monthly Food Stamp benefits to buy beef roast. The woman used to get $16 a month through Snap and told McGee that if she saved two months, she could spend $32 on a roast.
He plans to split it into pieces and freeze it to make it last.
“It’s the reality for so many people,” McGee said.