By DAVE SCHULTZ
Not since the 1970s, the analysts tell us, have American citizens experienced inflation — which The Economist website identifies as “rising prices, across the board” — like the nation is experiencing now.
Here’s a sampling, based on prices from January 2021 to January 2022:
• All items — 7.5 percent nationally, 7.9 percent in the Midwest.
• Food — 7 percent nationally, 8 percent in the Midwest.
• Housing — 5.7 percent nationally, 6.2 percent Midwest.
• Transportation — 20.8 nationally, 22 percent Midwest.
Those are eye-popping numbers, and Rachel Blakeman, director of Purdue University Fort Wayne’s Community Research Institute, doesn’t think things are going to turn around quickly.
“While economists were optimistic that inflation would be short lived as the economy rebounded last year, it looks like that hopefulness was misplaced,” Blakeman said in a statement Thursday. “Inflation looks to be an enduring feature of the economy at this point, and it’s hitting goods and services across the board, especially items that consumers must use like energy and food.”
The rise in prices have the potential to change the way Americans live until things turn around, Blakeman says. She makes note of the costs of used cars — up 40,5 percent nationally and 40.8 percent in the Midwest — in making a point about what people are doing.
“At one point it was ‘easy’ to negate the effects of the initial round of price hikes (like don’t buy a used car) if you didn’t need that particular good or service,” she said. “Some costs, like natural gas, are essentially impossible to avoid so it requires a mitigation strategy (turn down the thermostat and wear a sweater). but that only goes so far.”
And natural gas is up 23.9 percent nationally, 31.1 percent in the Midwest.
In a wry note, she says the Federal Reserve wants to hold inflation to 2 percent a year. Right now, Blakeman said that would apply to alcoholic beverages in the Midwest (1.2 percent), medical care in the Midwest (1.6 percent), and education and communication both nationally (1.6 percent) and regionally (0.8 percent)
“It’s harder to substitute items to offset price increases now, so we can expect households to make some difficult choices in the weeks and months to come about how they allocate their financial resources,” Blakeman said.
Electricity is a counterpoint to inflationary pressures, as it is up 10.7 percent nationally but only 4.4 percent in the Midwest.
There are a number of factors that come into play when looking at the differences between national and Midwest inflation.
“Some things are dependent upon international markets, but in the Midwest, there is a degree of supply choice that can be highly localized,” she said.
When asked if there was any good news on the horizon, anything that will indicate things could be getting better, she says the Federal Reserve — which keeps its eye on the nation’s money supply — may seek to “put the brakes” on the economy to rein in inflation. While “actions by the Federal Reserve will have a ripple,” she said, “it could take a while.”
daves@news-banner.com
