For a college student, inflation used to be a subject confined to economics textbooks or anecdotes that parents told about life in the 1970s.
Now, it’s a little more real. All they have to do is drive by the gas station or look in the meat case at a local grocery store.
“For my students, for a 22-year-old, it’s not something they’ve ever had to deal with much,” said Dr. David Harris, professor and chairman of the economics department at Benedictine College in Atchison, Kansas. “They could talk about it in theory, in the classroom, but they haven’t had to experience it.”
Just before the end of the spring semester, students would have been able to discuss a 4.2% year-over-year increase in the Consumer Price Index, the biggest jump since 2008. It’s no longer just a theory. Contractors are seeing a 124% increase in lumber prices and anyone who hits the road will notice gasoline prices are up an average of 49% in one year.
Now, just in time for Memorial Day, the meat for your backyard grill is facing a similar price pinch.
“It’s just disheartening to see prices go up so fast,” said Matt Heitman, co-owner of the Green Hills grocery stores in St. Joseph. “You’re going to see it, whether you’re out to dinner somewhere or you’re here at the grocery store.”
The U.S. Bureau of Labor Statistics reports a 4% price increase in all categories of meat products in the last year, including 7.6% for bacon and 6.1% for steak. NeilsonIQ, a data analytics company, found even higher prices in its own tracking of food categories, including increases of 8.6% for fresh meats.
Heitman, with 30 years in the grocery business, knows that food prices can be volatile, but he’s never seen anything quite like this.
“We’re able to get stuff,” he said. “We might order 100 cases and get 10 or 15.”
Trina Clark, co-owner of Clark’s Custom Meat Co. south of St. Joseph on U.S. Highway 59, said right now customers are taking the higher prices in stride. She said she’s noticed the increase most with steaks and spareribs but said nearly all cuts of meat are still available.
“Unfortunately, the outlook for prices this summer is high,” she said. “They’re rising right now because there’s a lot of shortages from the larger packers, primarily because of workforce issues.”
Grocery stores and butcher shops saw surging demand during the pandemic when people stayed home and prepared more of their own meals. Now, meatpacking companies and processors are struggling to find employees and maintain production as economic activity resumes.
The question is how long it will last. The Federal Reserve’s public statements point to a temporary phenomenon as bottlenecks in the supply chain work themselves out. But there are more ominous statements, like Boston Fed President Eric Rosengren’s acknowledgment that the Fed may have trouble meeting its longtime inflation target.
“You have to take seriously the idea that it is not going to be easy to get to 2% inflation,” he told Bloomberg News.
At Benedictine, Harris said there are unprecedented features in today’s economy, notably a massive fiscal stimulus and the pandemic recovery, which make forecasting difficult. One thing that’s certain, he said, is that inflation, sometimes referred to as the cruelest tax, won’t be an equal-opportunity problem.
“If you have fixed income or your wages aren’t increasing, then you’re worse off,” he said. “If you’re minimum wage or slightly more, those workers will be hurt by this. You might be paying more for a gallon of gas or a loaf of bread tomorrow, but you won’t be getting a raise tomorrow. It takes longer to adjust.”
Nevertheless, those in the grocery business expect to see plenty of grills fired up for the Memorial Day weekend.
“I don’t think the demand has changed,” Heitman said. “At Green Hills, we strive to have the best prices on meat in town.”
Clark said some backyard grillers might switch to more affordable options, like hamburgers, but she said her higher-end store still appeals to those who want more custom choices. “They come to us because they know they’re going to get that quality and friendly customer service,” she said.
Like just about anyone, Harris has to deal with higher prices, but at least he has plenty to talk about in classes now.
“It’s a fascinating time to be living,” he said, “but also to be an economist.”