Millions of Americans whose income has not kept pace with inflation — up 5.3 percent in August as compared with last year — have had to foot the bill for more expensive products due to price hikes
Over the past couple of months, Allison, a wife and mother of a toddler and teenager in Chicago, says she’s been spending about $50 more each week on groceries to feed her family — and that’s at a discount supermarket chain, Aldi’s.
“I used to spend $70 a week, but all of sudden this summer, I noticed that I couldn’t leave the store without spending at least $120,” said Allison, who works in education.
Like millions of Americans whose income has not kept pace with inflation — up 5.3 percent in August compared with a year ago — Allison and her family are feeling the pinch of the rising cost of living and giving up some things just to make ends meet.
Her family is scrimping now. “There are no more splurges like going to Home Depot to buy an extra plant or eating out,” Allison said.
Spurred by supply shortages and massive government spending, inflation has become an added tax on middle-class Americans coming out of the COVID lockdowns.
For households earning the US median annual income of about $70,000, the current inflation rate has forced them to spend another $175 a month on food, fuel and housing, according to Mark Zandi, chief economist at Moody’s Analytics.
“That’s the equivalent of a full grocery, electric or cellphone bill,” Zandi said.
Although government officials have called the inflation “transitory,” it’s running at a 30-year high, and has been for months.
Unpredictable supply-chain issues, including a record number of more than 70 cargo ships waiting to dock at the Port of Los Angeles, have made it difficult to predict when prices will stabilize.
To make matters worse, a trucker shortage has exacerbated the situation and shows no signs of abating. Everything from wood to electronics is becoming scarcer and more expensive.
Many consumer experts do not see any immediate relief in sight — with some bracing for a surge in credit-card debt. During the pandemic, many consumers had paid down debt because they were spending less while collecting larger unemployment checks.
But since April, credit-card balances and delinquency rates have been ticking up after decelerating for most of the pandemic, according to Zandi. Delinquencies are 1.54 percent as of Sept. 21, compared with 1.30 percent on April 21.
“Price increases will continue until the middle of next year,” predicted Gordon Haskett analyst Chuck Grom, pointing to a PepsiCo announcement this week that consumers can expect another round of price hikes in early 2022 on the company’s snacks and beverages.
Indeed, a 10-ounce bag of Lay’s potato chips — Frito-Lay is owned by PepsiCo — cost $3.75 in August, 50 cents more than a year earlier at Dollar General stores in the Southwest, Grom said.
The number of US households that report that it is “very difficult” to pay for their usual expenses has increased by 8 percent since early August, to 26.5 million, according to the Oct. 6 Census Bureau’s Household Pulse Survey.
Allison recently reached out to a debt-relief attorney, Leslie Tayne, to help her consolidate and lower her outstanding debt, which includes a hefty student loan.
“My business has exploded,” Tayne said.
Source: NY Post
