All of us are seeing rising prices and shortages in our grocery stores. Many shelves are emptier now than they’ve been for nearly two years. And when you find what you want, the price is higher than it was a month ago.
We’re also seeing much higher prices at the gas pump. And our healthcare costs are rising sharply. In fact, it’s difficult to find anything we need these days that doesn’t cost an arm and a leg. Including natural gas, new and used cars, housing rents, insurance, and clothing.
Inflation is happening all around the world. The United Nations estimates that in the past year, global food prices have skyrocketed by nearly 33%. Fertilizer costs have gone up by more than 50%. Oil prices have risen by nearly 66%.
The number of food-insecure people around the globe has doubled over the past two years. And more than 500,000 are experiencing famine conditions. This is an increase of more than 500% since 2016.
Antonio Guterres is secretary-general of the U.N. He warned of “the specter of a global food shortage in the coming months.”
Food a Victim of Soaring Inflation Rate
Here in the U.S., inflation recently hit a 41-year high, with the inflation rate rising to 9.1%. The Fed was expected to come up with another interest rate hike yesterday in an attempt to tame this beast. But that change is unlikely to curb this out-of-control problem in the near future.
In May, consumer prices were 8.6% higher than in May 2021. Food prices were up 9.4%. With some items – meat, poultry, fish, eggs – up 14.3%.
Two-thirds of the food banks in the Feeding America network are facing greater demand than normal.
More than 70% of U.S. consumers report being somewhat or very concerned about shortages and out-of-stock items.
Energy & Gas Prices Rise
Energy prices are up 34.6% over last year. That’s a huge leap. Fuel prices jumped 16.9% in just one month. A gallon of gasoline costs 48.7% more than it did a year ago.
Recently the national average for gas was $4.90 per gallon – 30 cents higher than in the previous month. Of course, in some areas such as the West Coast, it’s even more.
Those energy and gas prices contribute to rising food prices. That’s because most of the food we consume must be transported from different cities or states.
Macro Trends Advisors founding partner Mitch Roschelle said he expects inflation to stick around for a while. Long enough to be an issue in the November midterm elections. And maybe even in the 2024 presidential election.
Healthcare Costs Spiral
One of the many other ways Americans are being hit hard by inflation is in the healthcare arena. For example, the cost of drugs is up nearly 37%.
In 1960, healthcare spending made up 5% of the total gross U.S. domestic product. In 2020, it reached nearly 20%. That’s one-fifth of the U.S. economy. And it’s growing.
James Spencer is a data scientist at GlobalData. He said, “Our healthcare industry is in dire need of financial help. Or a policy restructure to allow it the financial freedom to… respond to our needs… without collapsing.”
Total healthcare expenditures rose to $4.3 trillion last year. That’s according to the Centers for Medicare & Medicaid Services. That amount is expected to rise to $6.8 trillion by 2030. In other words, the experts aren’t expecting things to improve any time soon.
Food Shortages Also an Issue
Let’s get back to rising food prices and availability. Consumer Brands Association CEO Geoff Freeman says U.S. groceries typically have 5 to 10% of their items out of stock at any given time.
These days, it’s more like 15%. At some stores, the unavailability rate is even higher. That’s due to extreme weather, labor and truck shortages, and the pandemic.
Patrick Penfield is a professor of supply chain practice at Syracuse University. He said, “As you walk through a lot of stores you won’t see the quantity and quality of items you are accustomed to seeing.”
Rising food prices and shortages are not going away anytime soon. That’s what just about every financial expert is saying. We all need to do what we can to prepare.