Connie Myers has always loved good sales. Two years ago, she was shopping at her local grocery stores in Winchester Bay, Oregon, but often paid top dollar for most other products. However, during the pandemic, she noticed that her dollar was not going that far.
Myers cut coupons much more religiously early in the pandemic. She felt prices would continue to rise after the global toilet paper shortage, a sentiment reflected in polls about people’s concerns about the country’s overall financial outlook. The 59-year-old is retired and lives on a fixed income from Social Security and disability benefits, so she can’t afford to go over budget. Now Myers envisions her purchases based on the coupons she’s collected, and it’s rare that she pays full price for an item.
âI’ve been a single mom my whole life so I know how to be thrifty,â she said. âBut still for a family, if I had a kid now, oh my God. I can just imagine what that would be like.
Food prices increased by around 9% between January 2020 and October 2021, according to Econofact. Food prices have been particularly volatile throughout the coronavirus pandemic, such as in March 2020, when empty store shelves were a familiar sight.
Over the past 12 months, inflation has risen by about 6.2 percent, according to the Labor Department. This is the largest 12-month rise in inflation since 1990.
WATCH MORE: What is driving inflation in the US and how price pressures could be reduced
Along with groceries, Americans have seen the prices of cars, gasoline, rents and other basic necessities rise. For low-income households, these increases have been particularly difficult.
At the same time, many experts say the economy is showing other signs of strength. Let’s take a closer look at the data.
What data supports the economy is good right now?
Inflation and the unemployment rate are two common indicators for assessing the health of the economy. As inflation rose, the unemployment rate fell to 4.6% at the end of October – the lowest since April 2020, when the unemployment rate hit an all-time high of 14.8% at the start of the pandemic.
âThe cost of unemployment for the unemployed is much higher than the cost of inflation,â said Michael Klein, professor of economics at Tufts University and editor of Econofact. “A two percentage point increase in the unemployment rate, I would say, is more damaging than a two percentage point increase in inflation.”
But the impact of unemployment is only felt by those who are unemployed, while inflation can be felt by everyone, which can sometimes lead to a misunderstanding of the economy, Klein said.
The country’s gross domestic product – the total production of goods and services – also continued to grow, increasing 2% in the last quarter. This is slower growth than in previous quarters, but according to Stanford University, an increase in GDP of around 2% is a sign of a stable economy. Economists say this shows a recovery from the 31.2% drop in GDP in the second quarter of 2020 – the biggest drop in U.S. history.
Some of the increases people are feeling right now could be seen as price catching up as the economy recovers from the pandemic, economists told PBS NewsHour.
WATCH MORE: Inflation a major problem facing the Biden administration
Klein said these price increases followed a period when prices were at historically low levels – when the economy was unhealthy – so it seems particularly shocking, especially to those with low incomes. But people are returning to work, some lower paying jobs offer higher wages, and the general economy has grown.
“In September, inflation was around 5.4% [over the previous year]. If you take the annual rate and look back two years instead of one year, inflation was only 3.4%, âKlein said. “If you normalize them further by looking back two years when we weren’t in the middle of this terrible recession, then inflation doesn’t look as big.”
For example, data from the Federal Reserve Bank of St. Louis shows that, compared with a year ago, food and beverage prices in US cities in October were up 5.1%. But compared to two years ago, the inflation rate is 4.5% and 3.5% compared to three years ago.
Experts aren’t sure how long the price hike will last, but it’s something the Federal Reserve is watching closely.
According to Econofact, the average inflation rate over the past decade has averaged around 1.7%, just below what the Federal Reserve considers an acceptable rate, which is around 2%.
How inflation affects us differently
There are other conditions that can affect how certain groups of people experience an increase in inflation. For example, SNAP benefits and Social Security payments often increase by a small percentage each year to account for the general increase in the cost of living. But for food, current monthly price increases exceed benefit increases, which can make it difficult for people on fixed incomes or unable to work.
“Rising prices are eroding the purchasing power of people,” said Jayson Lusk, food economist and professor at Purdue University. He added that people can make the decision to buy different food items cheaper than usual to mitigate price increases, but this is not always doable or ideal.
Economists have attributed the rise in prices to a variety of factors, from wage increases to the domino effect of the pandemic on the supply chain. Lusk said that while prices have gone up, wages have gone up in many industries as well. Wages for meat-packing jobs, for example, rose nearly 20 percent due to labor shortages, which put upward pressure on meat prices. But it has also given those working in the meat industry more purchasing power, as their wage increases outweigh price increases.
READ MORE: How the supply chain caused current inflation and why it might be here to stay
âIf you’re on a fixed pension or if you’re stuck in a salaried position that isn’t hourly and maybe doesn’t change as often, you’re not as well off. But if you look across the economy, wages have gone up, âLusk said. He added that focusing on a person’s purchasing power may be a better measure of financial well-being than prices alone.
Neil Berger teaches at a Title 1 school in Phoenix, Arizona, a state with some of the lowest teacher salaries in the country. He and his wife, who work at the same school, have had to cut their retirement savings and have turned to buying more sustainable groceries, like frozen foods and less meat. They also started gardening in order to grow their own produce.
Berger and his wife bought a house in February 2020, and with inflation skyrocketing in the housing market, they were able to refinance their mortgage to find a better balance. But for the families of his students, Berger said, finding affordable rental accommodation seems impossible, and parents often tell him about the rising prices of groceries.
The Bureau of Labor Statistics found that households in the lowest income 20 percent spend 10.8 percent of their budget on food while those in the top 20 percent spend 6.8 percent. from their budget to food.
Eva Aleman, 54, said she couldn’t work due to her disability and lived in social housing in Jacksonville, Florida. She has a fixed income and SNAP benefits, and finds it difficult to shop. She said it had been difficult because the prices had gone up, but her income had remained the same.
The only meat she said she can afford is chicken, and she has to be in small portions. She buys fruits and vegetables and cuts down on her milk intake, buying 1 gallon per month instead of a week, she said.
Local churches and pantries distribute groceries, she said, but they often run out of produce. Aleman also said churches don’t tend to offer Hispanic foods either, which can make it difficult to purchase meals that match his culture. She said her neighbors at her resort, who are all over 60, are also struggling. Latinos are among those hardest hit by the economic impact of COVID-19, experiencing more job losses, less pandemic relief and more difficulty making payments, according to a report by Brookings.
âWe need more sympathy and empathy for us and ask us, you know, what do we need? We need help to fight against the difficulties and not be able to buy what we need to eat, âsaid Aleman.