Inflation marches on. Here's where NJ consumers are getting hit the hardest
Michael L. Diamond, Asbury Park Press
5 min read
SHREWSBURY - Linda Lewis stopped by ShopRite here on Thursday to pick up chicken to cook for her grandchildren that night and summoned the willpower to skip what she really wanted: cake.
Lewis' sweet tooth made the decision difficult. Her budget made it easier.
"Once a month, you get that retirement (income) and then you try to get the things that you need," Lewis, 69, of Eatontown, said. These days, "I can't buy things that I want too much. I'm focusing in on needs."
Cereal prices spiked in April as inflation continued to weigh on shoppers.
New Jersey residents are getting hit with another round of price increases on a range of items — food, gasoline, air+fare and more — casting a cloud on their return to normalcy as the pandemic appears to fade.
Each item appears to be getting tripped up by its own set of circumstances, from Russia's invasion of Ukraine to the avian flu.
Economists trying to find the finish line are looking for more consumers like Lewis, who has reduced her spending and curtailed her driving. But for now, they say, inflation has yet to reach most consumers' breaking point.
The old joke is "high prices cure high prices," said Andrei Rjedkin, an economist who studies the price of protein for Urner Barry, a Toms River-based research firm. "Consumers will have to push back and trade down to more inferior goods. We’re seeing some corrections in some of these markets, but overall, a lot of these prices are near or at all-time seasonal highs."
Inflation in the region that includes northern New Jersey rose 6.3% from April 2021 to April 2022, lower than the U.S. average of 8.3% during the same time, the U.S. Bureau of Labor Statistics reported this week.
Still, wages and salaries aren't keeping up. Compensation costs rose 4% from March 2021 to March 2022, according to the bureau's most recent statistics.
An example of high gas prices, as prices have hit another record weeks before the summer driving season is set to begin, at Exxon on Route 35 in Keyport, NJ Thursday, May 12, 2022.
Consumers, however, have yet to push back against high prices in force. They cut back on their spending during the pandemic, saving money. They received federal stimulus checks. They reaped windfalls from rising real estate and stock prices. And they jumped to better-paying jobs, economists said.
After being cooped up for the better part of two years due to the pandemic, they are spending once again.
"People are kind of going with the flow with it," said Dina Sturino, 42, of Tinton Falls, who decided to go ahead with a family trip to Disney World for spring break even though airfare was thousands of dollars.
Nationwide, some items in April rose faster than others, according to the Bureau of Labor Statistics' detailed expenditures.
Experts said each product faced its own challenge.
Egg prices, up 22.6% over the year, rose 10.3% in April in part because an outbreak of avian flu killed millions of hens.
Chicken, up 16.4% over the year, was up 3.4% in April. That was in part because Russia's invasion of Ukraine knocked down one of the world's biggest producers of corn, which is used in chicken feed.
Beyond food, airfares, up 33% over the year, climbed 18.6% in April, in a sign that airlines are passing on the cost of higher jet fuel to customers.
Business owners testing price hikes have found they haven't reached the limit just yet.
Bags of Brazilian and Colombian coffee beans at Booskerdoo Coffee & Baking Co. in Asbury Park.
Coffee prices, for example, have increased 13.5% over the past year, putting pressure on operators such as James Caverly, co-founder and chief executive officer of Booskerdoo, a coffee roaster with six stores.
Other expenses, from flour for baked goods to labor, have increased as well, prompting Caverly to increase coffee prices by about 20 cents a cup. The decision was made easier knowing that at least one big competitor, Starbucks, raised its prices, too.
Have customers rebelled?
"Our sales right now are better than they've ever been," Caverly said.
The average household is paying about $315 a month more than it did last year for the same basket of goods, said Parul Jain, associate professor of professional practice, Rutgers Business School in Newark and New Brunswick.
It leaves the Federal Reserve Board under pressure to slow down business and consumer demand without tipping the economy into a recession, she said, describing what sounds like a complicated task.
Criticized for moving too slowly, the Fed now is playing catch-up by aggressively increasing short-term interest rates and raising borrowing costs — all while waiting for the supply chain to navigate disruptions, from COVID lockdowns in China to the continuing war in Ukraine.
"We've got a fair amount of issues on our hands," said Jain, who expects inflation will ease by the end of the year.
Those with the most at stake are consumers like Linda Lewis who are retired and living on a fixed income.
Lewis said she looks through the newspaper for sales and then has to decide whether to drive to each store to get the best price or save on fuel costs and simply buy them all in one place.
You need a calculator — and, in the case of Lewis, at least, a good amount of grace.
"You do what you have to do," she said. "You keep a smile on your face, you know, because some people can eat and some people can't. So I look at it as a tough blessing."
A sample of five categories regionwide with increases from April 2021 to April 2022, according to the U.S. Bureau of Labor Statistics:
1. Motor fuel: +42.1%
2. Used cars: +23.6%
3. Household energy: +21.2%
4. Meats, poultry, fish and eggs: +13.2%
5. Cereals and bakery products: +9.3%
Michael L. Diamond is a business reporter who has been writing about the New Jersey economy for more than 20 years. He can be reached at mdiamond@gannettnj.com.
