13 Things That Are About to Get More Expensive
Get ready to shell out even more for some of your go-to items, thanks to shipping wars, labor issues, and climate change.
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Feeling the pinch
If it feels like the pandemic is still pinching your wallet, you’re not imagining things. In August, the Consumer Price Index, which measures the cost of a “basket” of goods for the average urban consumer, showed prices rising an average of 5.3 percent compared to a year ago. That’s just one of the ways city life could change after coronavirus. Price inflation is hitting everything, it seems, from entertainment and electronics to essentials like food, clothing, and shelter.
What’s behind all the high prices? A global shortage of shipping containers has led to bidding wars to get products on ships. Add in a labor crisis, and the result is long (and expensive) delays in moving products from shipping ports to warehouses and eventually to consumers’ doorsteps. “There’s a whole bunch of bottlenecks along the way,” says Krishnakumar (KK) Davey, PhD, president of Strategic Analytics for IRI, a Chicago-based data and analytics firm. In recent days, President Joe Biden has announced agreements with the ports of Los Angeles and Long Beach—which together account for 40 percent of U.S. shipping container imports—to operate 24/7 as a step toward easing those bottlenecks.
In many instances, shortages of raw materials and the effects of climate change compound the supply problem. Adding to that, says Jennifer Christ, manager of Consumer & Commercial Goods Research for The Freedonia Group, consumers are making the problem worse by hoarding non-perishable, even as the pandemic may have changed your priorities. “People think, ‘If prices are going to keep rising, I’d better buy a bunch of it now.'” Plus, they may be worried about regularly heading out to one of these places you’re most likely to catch coronavirus. We break the price increases down below.
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Computers and electronics
Computers, cameras, TVs, video doorbells, kitchen appliances, and even electric toothbrushes all depend on microchips to operate. And the world currently has a very limited supply of those microchips. When COVID-19 first appeared, the factories that manufacture microchips shut down while orders piled up. Those factories are still struggling to meet demand. It doesn’t help that a Japanese microchip plant was damaged by fire, and a factory in Texas had to temporarily close during last February’s brutal storms. In Taiwan, where 63 percent of the world’s chips are made, severe drought threatened chipmaking, which requires large amounts of water. Some large TVs now cost about 30 percent more than they did a year ago. Experts predict the chip shortage will last perhaps until early 2023.
Automobiles also depend on microchips (sometimes known as semiconductors) for dozens of advanced functions. But when the pandemic started, many automakers anticipated a lull in sales and canceled their orders for microchips. When sales resumed, factories couldn’t ramp up fast enough to meet the demand. As a result, Ford, General Motors, and other manufacturers will roll out 1.5 million to 5 million fewer vehicles this year, and those that are available will cost 7.6 percent more than they did at this time a year ago.
Christ notes that with inventory so limited, the usual tactics for scoring a deal—shopping at the end of a month or quarter when sales staff are trying to meet quotas—won’t be effective this year. “People will pay more if they need a car.” If you think a great used car is the next best option, think again. The price of previously owned vehicles has surged by 31.9 percent, according to the CPI. The good news is that car prices are starting to rise by smaller amounts. Inventories might start being replenished late this year, but the shortage will be felt through 2022, at least.
Rental cars aren’t immune to the COVID effect. At the start of the pandemic, when no one was traveling, rental car companies sold off large chunks of their fleets for revenue. With supply down and demand up, the average cost to rent a car was 73.5 percent higher this past July than a year earlier. If you’re considering skipping a rental car altogether on vacation and just using a ride-share service, be aware that Lyft and Uber are also charging more. A lack of drivers willing to risk their health in enclosed spaces has led to surge pricing.
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According to the CPI, gas prices rose 42.7 percent over the past year, with several contributing factors. Early in the pandemic, many of the countries that produce crude oil—which in turn is used to make gasoline—curtailed their production when lockdowns prevented travel. “Then the prices started going back up again as people started taking road trips—it felt like a safe way to travel,” Christ says. But oil producers were caught off guard with the resurgent demand and raised prices to compensate for low supply. While production is slowly increasing, oil-rich countries are wary of resuming pre-pandemic levels only to weather another sudden collapse in demand. In addition, domestic gas production was briefly halted when Hurricane Ida hit Louisiana’s Gulf Coast in August and nine oil refineries were temporarily shuttered.
If you’re reading this in your yoga pants and sweatshirt, you might be surprised to learn that clothing prices are up 4.2 percent over last August. One factor: rising cotton prices, due in part to former President Trump’s trade policies with China, which President Biden has largely kept in place. Retail workers, too, are demanding higher wages in today’s new reality. And since loungewear and athleisure are the new must-haves, their prices have risen accordingly. There has been some pent-up demand for going-out clothing, as well, so the price of dresses has increased 11.9 percent, while men are paying 4.7 percent more for suits and sports coats. Likewise, Davey says that after a year of growth spurts, children who returned to school this fall needed new clothing, and prices grew with them (1.4 percent for boys and 2.8 percent for girls). Here’s where to sell old clothing.
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Major toy manufacturers have warned that their ability to get some of the most popular items on shelves in time for holiday shopping will be limited. Once again, the global shipping crisis is largely to blame, according to manufacturers of popular brands like LOL Surprise! and Fisher-Price. Even companies that arranged for shipping containers in advance of the holiday season plan to raise prices 5 to 10 percent to account for the extra shipping charges. Kids have always had crazy toy fads, and today is no exception. If the kids in your life will be crushed without one (or more!) of the year’s hottest Christmas toys, be sure to shop early.
Even if you’re able to get all the toys your kids are dreaming of, you’ll also want to make sure you have a tree to pile them under. According to the American Christmas Tree Association, both live and artificial trees will be in short supply this year. Climate events like fires and drought in the Pacific Northwest have affected tree crops, while the shipping crunch could raise prices of artificial trees by up to 25 percent. Even ornaments and skirts to dress up the tree may be harder to come by, and more expensive when you do find them.
The story behind the housing crunch—prices were 18.1 percent higher in August compared to a year ago—is much the same as in other categories: Material shortages and labor conditions led to low inventory of available homes for sale. Fortunately, the price of at least one of those materials—lumber—has finally come back down to earth. However, Christ says other factors, like zoning restrictions in many municipalities that limit where builders can develop homes, have curtailed supply. In addition, she says, many people who might otherwise be interested in selling have been reluctant to have strangers traipsing through their homes in the middle of a pandemic. Some analysts expect the rate of inflation in housing to level off by next summer.
For renters, here’s the verdict on whether rent will go down.
Food at home
Grocery prices continue to climb, with an average price increase of 3 percent over this time last year. But that’s not the whole story. Certain types of food are showing more significant increases. Take bacon, for example. The average price is now just over $7 for a pound, more than a 25 percent increase over its $5.56 price a year ago. But it’s not the only protein that costs more. Steak and eggs are both seeing dramatic increases of nearly 20 percent or more.
Meat prices started rising early in the pandemic when COVID outbreaks forced the closure of several plants. Drought has made the price of cattle feed skyrocket. And lack of competition in the industry—just four companies handle most of America’s meat processing—has enabled prices to remain high.
Washing those foods down is getting more expensive, too. Both Coca-Cola and PepsiCo have announced price increases, thanks to supply-chain and labor issues. In addition to their iconic sodas, both brands also sell popular juices, teas, and waters. Coffee prices are surging, too, thanks to drought and frosts in Brazil, the world’s largest producer of java.
“We expect inflation to remain for the next three to four quarters in food and food services,” Dr. Davey says.
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Food away from home
Rather make reservations than make dinner? Don’t expect it to be any cheaper. Restaurant prices are heating up too, with prices 4.7 percent higher than a year ago on average, and 6.9 percent higher at “limited service” eateries. Restaurants are feeling the same squeeze on food prices as consumers, thanks to challenges with shipping and raw materials. Starbucks has reported difficulty sourcing numerous menu items ranging from flavored syrups to chai tea bags. In addition, labor conditions have forced the industry to raise wages. Many restaurants also have new expenses that weren’t on the menu pre-pandemic, like stocking personal protective equipment, working with third-party delivery services, and maintaining outdoor dining spaces. And with winter on the horizon, it may be difficult to lure diners indoors, since restaurants remain one of the top places you’re likely to catch coronavirus.
Hospitals are paying more for supplies this year, and it’s not just for masks and gloves. Equipment like heart defibrillators, exam tables, and IV poles, which depend on raw materials like metal, plastic, and microchips, are now in short supply, and when they are available, they’re costing more. Ambulances, too, are on backlog. Ford Motor Co., which builds the chassis for 70 percent of American ambulances, shut down production at four of its plants in April due to the microchip shortage. In September, the American Ambulance Association told Denver7 that production was down 30 to 50 percent.
At least one medical group in California has been lobbying insurers to cover their added costs, but insurers have pushed back. It’s anyone’s guess whether those costs will ultimately be passed on to consumers. “So much of what we pay in health care isn’t transparent,” Christ says. Meanwhile, the costs of some home health products are increasing. Manufacturers of diapers, incontinence products, feminine hygiene products, and, yes, toilet paper, say they are raising prices to counter supply-chain issues.
Seventy-six percent of Americans spend at least some of their time playing video games, and in the first six months of 2021, the amount of money they spent on video gaming increased 35 percent. It may be a good thing that gaming is drawing older players now (those ages 45-64 are playing for up to 16 hours each week) because they’ll need more disposable income to afford their games. Nintendo and Sony have said that due to the microchip shortage, they won’t be able to produce as many Switch and PlayStation 5 consoles, respectively, as they would like. That shortage is likely to increase prices.
The games themselves have also become more expensive. For 15 years, the standard price of most games was $60, but Sony Playstation and Microsoft Xbox leveled up their pricing scheme to $70 last fall, citing higher expenses now that games have become more sophisticated. Even “retro” games — those made to be played on consoles released before Playstation 4 and Xbox One — cost an average of 33 percent more than before the start of the pandemic. Even watching some favorite shows on TV is going to cost more, as Hulu announced a $1 rate increase for its streaming video service. Here’s how you can save money on streaming.
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Old-school entertainment will likely cost more, too. Publishers are warning about a shortage of physical books. In the first half of 2021, book sales increased 18.5 percent over the previous year, with adult and young adult (YA) fiction leading the way. But publishers are struggling to produce as many books as we want to read due to paper shortages, labor challenges, and shipping struggles. If you don’t want to pay pandemic prices for your fiction fix, check out these places where you can read books for free online.
Planning for the future
Even if you’re able to find (and afford) all the products you and your family need to ring in 2022, don’t expect supply and pricing issues to settle back down in the new year. “There seem to be pretty widespread feelings that a lot of these challenges are going to persist well into next year,” Christ says. “There’s more controversy on whether it will be OK by 2023.” It’s not all bad news, though. Some of the positive changes that have occurred as a result of the pandemic, like the availability of online shopping, or allowing restaurants to deliver alcohol along with food, will likely continue. “If there’s a non-pandemic reason, like convenience, for a pandemic habit to still exist, people will keep doing it,” Christ says. “Instead of things going back to the way they were in 2019, it’s more about moving forward from where we are today.”
- Krishnakumar (KK) Davey, PhD, president of Strategic Analytics for IRI, a Chicago-based data and analytics firm
- Jennifer Christ, manager of Consumer & Commercial Goods Research for The Freedonia Group
- U.S. Bureau of Labor Statistics: Consumer Price Index Summary
- U.S. Bureau of Labor Statistics: Consumer Price Index for All Urban Consumers (CPI-U): U. S. city average, by detailed expenditure category
- Denver7: “The global chip shortage is causing problems for first responders”