Experts are warning it’s time to hang on to our wallets. They say inflation is on its way. Could this be why so many are telling me they are feeling the urgency to get prepared?
Prices on groceries rose rapidly and are expected to continue rising through the next year by as much as 2%. That may not seem like much, but the average person spends $300 per month on groceries. This increase comes on top of a 4.1% increase since the beginning of the pandemic or a $124 per person annual increase in less than two years.
Multiply this by the number of people in your family and you can see it is going to take a hit on your budget . For a family of four this means an additional $496 per year.
There are several reasons for this escalation in prices. The pandemic caused increases when people began making meals at home causing greater demand for food from grocery stores. Some companies were forced to eliminate items and concentrate on those that were the more popular and in demand. Our local grocery store had a sign in the freezer section apologizing for the lack of Hot Pockets. When they returned to the store shelves there were only two varieties instead of the several normally available. Because of higher demand and limited supplies, prices went up.
Prices will continue to go up as we deal with the aftermath of natural disasters which destroyed many crops. We witnessed this recently in Texas as citrus, broccoli, carrots, cabbage, cauliflower, and feed for beef and sheep were all lost to the freeze. The freeze occurred during calving season and many young cows and lambs did not survive. Dairy farmers were forced to dump millions of gallons of milk that could not be delivered because of weather conditions. Experts estimate many of these losses will continue to affect prices into next year. Of course, this means the 2% increase in food prices predicted before the freeze may actually be too low.
Another reason for escalating food prices is the increase in the cost of fuel. New regulations this year have caused the United States to become dependent once again on oil from foreign countries. The price of gasoline affects the price of everything else. Food, clothing, household goods, sanitation supplies, everything we consume is trucked to us or to a train depot or trucked to a port. As truckers are forced to pay more for fuel, they are forced to increase the price they charge for transporting goods. As transportation costs increase, manufacturing prices increase; grocery stores have to charge more, shipping Christmas packages to loved ones will increase, airline tickets go up, again, the price on everything increases as fuel prices increase.
On Saturday, we awoke to the news that the major supplier of fuel to the east coast and gulf states had to shut down production and distribution due to their systems being hacked. This will cause shortages and spiking prices in the affected areas.
Distribution of fuel, prices rising, and shortages are also being created due to the lack of truckers. There is a huge shortage of drivers causing fuel to sit at refineries creating shortages at the pumps. The National Tank Truck Carriers, the industry’s trade group, said that between 20% and 25% of tank trucks are parked. Drivers of these tankers need special education meaning the positions are not easy to fill. Summer demand is expected to see prices surge.
However, gasoline prices are not the only reason products are increasing in price. In our business we export nuts and dried fruits. From personal experience I can tell you there are normally no more than a half dozen ships waiting for a dock to unload their goods and reload for return trips to Asia, Europe and around the world. At this time there are more than 20 ships waiting for a dock at all our major ports.
Some shipments are being delayed by months. Costs increase as truckers deliver a container to the port but there is no ship on which to load it. Truckers must then return the container to the farmer or manufacturer who is exporting goods and that means a double charge for transportation. Fines are being imposed due to delays. You may not think this affects you, but companies that export also serve the United States and pass costs along to both consumers here and the consumers living in the countries to which they export. This dock crisis also means all products imported are now and will continue to be in short supply.
At totallyready.com and on the Totally Ready Facebook page, we post items to purchase each week with the goal of having a three-month supply by the end of the year. This year we are not only focusing on food but also non-food essentials. One of the other areas in which we will see increased prices is sanitation supplies, non-food essentials.
After the pandemic hit, stores sold out of products that we can normally purchase very inexpensively. Products such as hand sanitizer, disinfectants and bleach were in very short supply and they continue to be difficult to find and are often limited in the amount you are allowed to purchase. A recent study found the demand for hand sanitizer went up 255% in 2020. This is an example we can all relate to and a wake-up call as we realize stocking up on non-food items is a vital part in any great preparedness program. Recently Costco was limiting the number of paper plates you could purchase, another important non-food items.
The average new car price was $37,200 in the first quarter of 2021, up 8.4% from the same period just a year ago. The price of used cars sold at auction has increased 26% since the beginning of 2021. The price of used cars sold retail has increased 7%. The most serious reason for the price increase is the inability of manufacturers to get parts. Some parts are not available and increasing in price due to problems at the ports. Electronic chips were further affected due to the freeze in Texas which curtailed production and limited delivery of raw materials necessary for production.
As people were forced to stay home during the pandemic, they began to spend money on their homes to make them more comfortable and more functional. Many added offices, desks and chairs for use in homeschooling, and purchased lumber to install walls to allow for more privacy for business and school Internet interactions. This trend increased demand for raw materials such as lumber but also demand for furnishings. Lumber has increased 250% since the beginning of the pandemic.
Appliance deliveries are now taking months after an order is placed and prices are rising. Again, this is due to higher demand, lack of computer chips, delays at the ports and increased transportation costs. Experts expect the demand for these items, and rising prices, to continue.
Speaking of business meetings from home and schooling from home, there has been and will continue to be an increase in the price of computers and other electronics. Again, this is not just caused by demand alone but also by a disruption in the supply chain.
We have seen dramatic increases in utility bills as families have been hunkered down at home. Our use of heating and cooling as well as increased time using appliances and electronic devices has led to more demand. When you are home more, you use more. Energy costs are expected to rise 2.8% this year.
What can you do?
1. Begin or increase your commitment to food storage. Follow the plan at Totally Ready either on Facebook or the blog and purchase food storage each week. Once you have a three-month supply of the foods you eat, you will never have to pay full price for food. Wait for the sales to replenish what you have used. I love going to the store and shopping the sales while walking past all those full price items. I know I can wait because I can eat from my food storage until those other foods are on sale.
2. Evaluate what you use in the way of non-food items and stock up now. Remember you eat an elephant one bite at a time so don’t rush, just be consistent. If you have a tax refund coming or a stimulus check, consider using that to stock up. Once stocked up, you can wait for sales on non-food items as well.
3. Pay off high interest debt. Again, consider using your tax refund or stimulus check. Pay off the debts with the highest interest first and then if it is a credit card, cut it up! If you feel you need help ask your bishop or branch president about the Personal Finances for Self-Reliance class and sign up. It is a great class.
4. Cut your expenses. Go thru the memberships and APPs you have and cut back. Compare streaming, cable and internet providers and change what you are now using when you find a cheaper solution. Cut back now. A little sacrifice now as you build your storage will have great rewards later.
5. Be aware of utility costs and cut back your usage. Check the blog at Totally Ready.com for tips. Changing habits now will help offset price increases as they come.
I am asked constantly by friends, those attending my classes, Facebook and blog followers and readers, what they can do to plan for inflation they believe is coming. The not so unexpected answer, get out of debt and stock a General Store in your home with food and non-food essentials. There is great peace that comes from knowing you can care for your family’s needs. Now is the time.
Visit TotallyReady.com and Totally Ready on facebook for tips and answers to your questions. Message Carolyn at: [email protected] or on facebook messenger to ask a question, make a suggestion for a future article or schedule a zoom class for your ward, family or community group.