Despite falling inflation, increases in grocery prices – which rose sharply by 11.4% in 2022 after rises of 3.5% each in the two previous years – are showing no signs of slowing down, and it’s hurting Americans across the country.
Inflation is generally measured as the year-to-year increases in prices, and its presence reduces the purchasing power of money. For example, in an economy where inflation is at 10%, a good which costs $100 in July 2022 would cost $110 in July 2023.
Inflation is not necessarily detrimental to an economy; in fact, many jurisdictions encourage a small increase of around 2-3% per year. A small, manageable increase promotes spending and investment in anticipation of rising prices, while it can also help with debt relief for governments, businesses and individuals.
It is, however, problematic when wages and salaries do not keep up. If inflation is at 10% but wages are only increasing by half of that, citizens feel worse off economically; the greater the difference, the greater the strain.
Inflation: Recent Events Have Played A Role
America is not alone in experiencing inflation. Following the Russian invasion of Ukraine in February 2022, commodity prices rose across the world. Economic sanctions on Russia limited the options Western democracies had to secure essentials such as oil and gas, while disruption to Ukraine’s wheat exports saw price rises on supermarket shelves.
The disruption of the pandemic also played a major role in rising inflation. When demand for goods and services suddenly falls off, the economy comes to a sudden halt. Combined with supply chain disruption and changes to consumer behavior, inflation rises sharply as the economy tries to catch up with society returning to normality.
The Impact on Americans
Inflation has been falling over the past 12 months or so from its June 2022 peak of 9.1%. Such high levels impact employers, who are forced to limit wage increases or make redundancies. This is reflected in real wage increases, which have consistently lagged inflation for more than two years.
When wage increases do not keep up with inflation for such a prolonged period, Americans truly feel the economic impacts. Despite inflation falling to 3.2% in July, with wages rising by 5.97%, the knock-on effect from 26 months of deficit will be felt for some time. Unfortunately, economic hardship cannot be resolved overnight – it will take some time before commodities feel as affordable as they were previously.
While inflation is a major factor in rising prices, groceries have been affected by unforeseeable impacts to the agricultural industry. Heatwaves and droughts cause a reduction in harvestable crops, with American corn seeing its lowest yield in a decade last year. Combined with the war in Ukraine, political uncertainty and international trade restrictions, supply has reduced while costs have increased – a recipe for disaster when it comes to affordable groceries.
Without government action – whether it be through reduced taxation or increased subsidization – Americans can only rely on market forces in the hope a trip to the grocery store will become more affordable in the foreseeable future.
Shay Bottomley is a British journalist based in Canada. He has written for the Western Standard, Maidenhead Advertiser, Slough Express, Windsor Express, Berkshire Live and Southend Echo, and has covered notable events including the Queen’s Platinum Jubilee.
From the 45 Archives
‘You Really Oughta Go Home’: F-22 Raptor Stealth Fighter Flew Under F-4 From Iran
