Brace yourself. According to several indicators, prices will continue to spike even as Jerome H. Powell, the Federal Reserve chairman, downplays inflation risks.
Powell and Treasury Secretary Janet L. Yellen, the former Fed chairwoman, testified on March 24 before the House Financial Services Committee.
“We do expect that inflation will move up over the course of this year,” Powell said. “Our best view is that the effect on inflation will be neither particularly large nor persistent.”
When pressed by Republican lawmakers about how raising taxes would affect consumers and small businesses, Yellen stressed that tax increases would be necessary to back up the White House’s infrastructure package, The New York Times reported.
Here are seven prices that are spiking while the Federal Reserve dismisses inflation risks.
Semiconductors are needed to manufacture electronic devices, from smartphones and PlayStations to medical diagnostic equipment and automobiles. There is a shortage of them, which caused a spike in prices. This is affecting economies around the world.
The semiconductor shortage won’t end soon, said Morris A. Cohen, a professor of manufacturing and logistics at the Wharton School, in a Penn Today report.
“We’ve seen shortage allocations. If you want to buy a car today, you’ll probably have to wait to get what you want. This is also true for a lot of other products. Some prices will go up and there will be more delays,” Cohen said.
During the pandemic as people were locked down and staying home, gasoline demand plunged, and prices dropped.
In April 2020, the national average for all gas grades dropped below $2 a gallon for the first time in more than four years, according to the U.S. Energy Information Administration.
But now prices are increasing fast — up more than 25 cents a gallon nationwide in January 2021 to an average of $2.68 for regular, according to the auto club AAA. The current average nationwide for regular gas is $2.869. Expect more increases all the way to summer, Yahoo reported.
Animal feed prices are on the rise in the U.S. The sector is expected to see a 12 percent increase this year, according to the agricultural export credit agency CoBank.
The median price for homes sold increased 16 percent from a year ago to a record $331,590 during the four weeks ending March 21, 2021, according to real estate brokerage company Redfin Corp.
“Although the average sales price was 5.3 percent below the average asking price of $349,973, a record 39 percent of homes sold were priced above their list price, up from 24 percent a year ago, Market Watch reported.
Price hikes on new and used cars are squeezing U.S. auto buyers. As a result of the pandemic, used-vehicle prices soared even more than new ones.
Used car average prices rose nearly 14 percent — roughly 10 times the rate of inflation — to more than $23,000, according to data from Edmunds.com.
It was among the fastest such increases in the used car sector in decades, said Ivan Drury, a senior manager of insights for Edmunds.com.
Why the rise in prices? When buyer demand picked up in late 2020, there were fewer used vehicles available, AP reported.
Coffee drinkers will need to dig deeper into their pockets for their morning cup of java. Coffee prices are rising and supplies are shrinking due to a worldwide shortage of shipping containers, according to a recent Bloomberg report.
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Food prices are spiking as well so expect higher grocery bills as major food companies pass along inflationary costs in transportation and those related to covid-19 protocols.
Seventeen well-known food companies have recently warned about rising levels of inflation, according to Jefferies food sector analyst Rob Dickerson. They are B&G Foods; BellRing Brands; Campbell Soup; Conagra Brands; Flowers Foods; General Mills; Hostess Brands; J&J Snack Foods; Kellogg; Kraft Heinz; McCormick; Mondelez; Nomad Foods; Post Holdings; Hain Celestial; Hershey; and TreeHouse Foods, Yahoo reported.
