Break open the wallet.
With inflation at its highest level in 40 years, people are paying more across the board. From more expensive food to an increase in the cost of gas every time you fill up your tank, virtually every aspect of the economy is feeling the squeeze right now.
Here are five areas in which prices have especially spiked in recent months and what experts say to expect going forward.
After falling in early 2020 at the outset of the pandemic, gas prices have roared back in 2021 and the start of 2022. According to data from the real-time fuel price app GasBuddy, the average price of a gallon of gasoline doubled from April 2020 to Feb. 12, to $3.48 per gallon.
Patrick De Haan, the head of U.S. petroleum analysis at GasBuddy, said the higher prices are a symptom of supply chain woes’ troubling the economy. Many oil companies cut back on production in 2020 when oil prices plummeted as countries began instituting stay-at-home policies and people around the world drove less.
“Almost every producer cut noticeably,” De Haan said. “OPEC cut production by a third. The U.S. cut production by a third. Nobody really thought twice about it until vaccines gave an opportunity to reopen the economy.”
De Haan said those reopenings — both in the U.S. and around the world — have caused a knot in the supply chain: More people are looking for fuel just as oil companies are producing less of it.
This demand imbalance could last. De Haan said it would be anywhere from six to 18 months before prices stabilize. And the market could be thrown into further disarray if Russia reacts to any potential economic sanctions by decreasing oil production or if another Covid variant appears.
“It’s all one system,” De Haan said. “It’s a global commodity. What happens in any country can have an effect.”
While the used car market used to be the place to find discounted vehicles, that’s not the current reality. According to the online car marketplace CarGurus, the price of a used car has increased by almost 50 percent since June 2020.
Kevin Roberts, CarGurus’ director of industry insights and analytics, said the auto industry faces a similar issue as the fuel industry: increased demand at the same time production is lagging. Automakers shuttered factories and cut back on the production of new cars during the pandemic, with the number of new vehicles on dealer lots falling from 4 million in April 2019 to less than 1 million in September.
Fewer commuters have taken mass transit since the onset of the pandemic, and Roberts said that people began looking for cars as cities and economies reopened. And with few new cars available, buyers began to move to the used car market.
“It's real-life economics 101,” Roberts said. “Demand remained high, supply remained constricted, so prices went up.”
And it’s not just individuals and families competing for used vehicles; Roberts said car rental companies have started buying pre-owned cars.
Automakers are also fighting a shortage of computer chips used in high-tech vehicles, which is further preventing them from building as many cars.
While production might not reach pre-pandemic levels until the second half of 2022, that doesn’t mean prices will fall immediately, Roberts said.
“Just because production is up doesn't mean we'll revert back to normal,” he said, adding that even full-production won’t make up for the shortage of vehicles that weren’t made during the pandemic. “We’ll still be under where we could be on new vehicle sales.”
Electric bills have spiked this winter, with increases sending customer bills in New York; Newark and Jersey City, New Jersey; and other cities to record highs. According to data from the Bureau of Labor Statistics, the price of electricity rose by 10 percent from April 2020 to January.
Experts have attributed a large part of the increase to a rise in the price of natural gas. According to the Energy Information Administration, the U.S. gets about 40 percent of its electrical power from natural gas; and the industry is facing the same supply and demand constraints as the gasoline and auto industries.
Electricity companies have passed the increases on to consumers, with bills jumping so high that New York Gov.Kathy Hochul called on the utility company Con Edison to review its billing practices.
If you’ve shopped for groceries, you’ve likely noticed that food costs more lately. According to the NBC News grocery price tracker, the average price of bacon has jumped by 35 percent since February 2020. The price of ground beef has risen by 19 percent, and the price of a dozen eggs has risen by 23 percent.
Retailers have blamed the price increases on supply chain challenges, including labor and transportation shortages, higher demand and increased fuel costs. But officials in Congress and the White House have accused producers of ramping up prices higher than necessary.
“Your company, and the other major grocers who reaped the benefits of a turbulent 2020, appear to be passing costs on to consumers to preserve your pandemic gains, and even taking advantage of inflation to add greater burdens,” Sen. Elizabeth Warren, D-Mass., wrote in a letter to the heads of Kroger, Albertsons and Publix in December.
Renters have felt the sting of inflation, as well. According to Zillow’s Observed Rent Index, rent prices in the U.S. have risen by 18 percent since January 2020.
Zillow senior economist Jeff Tucker said that, as for cars and fuel, much of the growth in rent prices can be attributed to a supply-demand imbalance. Rent growth slowed in early 2020 as people left cities and offices, restaurants, theaters and sports leagues shut down.
The return of those institutions last year, along with vaccines, prompted many people who moved away — and those who were looking to get their own places after years of living with roommates — to all vie for the same limited number of available apartments.
“All of that created a perfect storm starting in spring 2021,” Tucker said. And that storm is continuing to this day.
While the drop in supply for gas and cars can be traced to the start of the pandemic, Tucker said U.S. housing has been squeezed for decades.
“The building industry took a nosedive after 2006,” Tucker said. “It took a long time to get back to normal rates. And we haven’t made up for the deficit of underbuilding. That means as we have this big wave of people, there aren’t enough apartments.”