There’s no escaping it: Prices are rising across the board, including all the essentials – food, clothing and shelter.
American home prices are up 20% over the past year. Prices of food eaten outside the home were up more than 4% in June over the past year, and apparel prices rose nearly 5% over the same time period.
That’s not all. Virtually every aspect of American life is getting pricier – a key measure of inflation just hit a 13-year high.
Here’s a look at three ways everyone is paying more.
Buying a car
Car prices are through the roof.
At the start of the pandemic, factories shut down and car supply sharply declined. A year later, Covid-induced closures are still sending shock waves through the auto industry. Add in a global chip shortage inhibiting the production of new cars and buyers who are eager to buy cars, and you’ve got the perfect supply and demand storm to drive prices up.
In May, the average new car price hit a record $38,255, according to JD Power, up 12% from the same period a year ago. About two-thirds of car buyers paid within 5% of the sticker price in May, with some paying even more.
With such short supply, car dealers are less likely to offer their usual deals this year, Matt Degen, an editor at Kelley Blue Book, told CNN Business.
“If you’re looking for a deal, sorry, but you’re probably not going to get one. In 2019 and in 2020, when car sales were opened up, dealers were desperate to sell cars,” Degan said. “This year, because of the supply and demand problem, they don’t have to make deals because they’re going to sell [cars] even without those deals.”
It’s not just the new car market that’s all out of whack. A new Edmunds.com analysis for CNN Business showed that some one-year-old cars are selling for more now than when they were new. The average re-sell price is 95% of the original price, according to the analysis.
Dealers don’t have enough cars to fill their lots and sell to buyers, and buyers aren’t seeing the options they want on dealers’ lots, so used cars are taking the place of new cars that just aren’t available right now.
So when is a good time to buy a car? Probably not anytime soon, according to Degan.
“Our analysis is looking at possibly later this year, but it could go into next year. It all depends on supply chains,” Degan said.
Taking a weekend road trip
What if you want to take advantage of being vaccinated and head out on a weekend getaway?
Well, rental car prices are rising, too. Daily car rental rates have increased 86% compared to this time last year and 140% more than 2019, according to Julie Hall, a spokesperson for AAA.
Blame supply chain disruptions for rental car price changes, too.
At the start of the pandemic, rental car companies had to fight to stay afloat, renting cars for a fraction of their normal prices and selling off their fleets as used cars. By the time people started getting vaccinated and traveling again, rental car companies’ inventories were significantly lower than pre-pandemic standards. To make matters worse, automakers are limiting the number of cars they’re selling to fleet customers like rental companies because of chip shortages.
“If you’re planning to rent a car this summer book early, remain flexible with timing and pick-up location as much as possible, and work with a travel agent,” Hall told CNN Business.
But let’s say you get lucky and find a rental car. Now you have to get gas.
Since the start of the year, the national gas price average has increased 40% from $2.25 on January 1 to $3.13, according to Hall. Don’t expect the record-breaking highs to stop anytime soon. Average gas prices are expected to rise to well over $3.25 by the end of the summer.
AAA reported travel over July 4 weekend that surpassed even pre-pandemic records. High demand for gas and low supply resulting from a shortage of truck drivers and oil will continue to drive prices up.
If you can get past the high price of a rental car and the cost of gas, you’ll need to figure out a hotel, too.
Over the last four weeks, the average daily rate for hotels has hit $130.90, up from $95.37 over the same period last year, according to data from STR, a global hospitality data and analytics company.
Even though prices are up since last year, in 2019, before the pandemic, average daily rates for this month were $132.99, a little higher than they are now.
If you still want to celebrate the return to ‘normalcy,’ hosting a party or gathering might be a good alternative.
Be prepared to compromise on your wish list and shorten your guest list, though.
The demand for events, such as weddings, corporate events and family gatherings, has skyrocketed in the past few weeks. Amid a shortage of supply and a shortage of labor, hosts and guests should lower their expectations and be ready to find other options, Heidi Hiller, creative director at Innovative Party Planning in Baltimore, Md. told CNN Business.
“It is affecting us big time,” Hiller said. “We’re well aware that people are coming in and asking us to design and produce an event that is within weeks of their request, but the product is not moving quickly. So that’s causing rush shipping charges, and rush everything charges, on top of the product already costing a little bit more.”
Now, many contracts have an “or equal substitute” exception because vendors can’t promise they will have enough product or labor to deliver a set amount of a good, Hiller said.
The show must go on though, so vaccinated customers aren’t letting shortages or rising prices stop their plans to reunite with friends and family. To accommodate for cost and shortages, hosts are lowering guest counts and finding substitutes for what they initially wanted, according to Hiller.
“The expectations of guests are less, too, so it’s okay to not have everything you thought you were going to have if it’s going to cost too much and still have the party,” Hiller said.
Even if you opt for a smaller gathering, sans party planner, you’ll probably still encounter higher prices.
Let’s say you want to host a dinner party at a restaurant. The price for food away from home rose 0.7% in June.
If you’d rather stay in and host at your place, prices will probably be higher too. Prices of food at home increased 0.8% last month. Specifically, meats, poultry, fish and egg prices are to blame with a 2.5% increase.
Regardless of food prices though, people still have to eat, so the best option is to try to substitute the most expensive goods when possible, Edward Yardeni, president of Yardeni Research, told CNN Business.
“I don’t see that having a party at home is different than having a meal at home. Whatever food you’re going to buy has gone up in price,” Yardeni said.
One good substitute might be serving frankfurters, which decreased .6% in price last month, instead of other meats. Bakery products also got cheaper last month, so if you’re looking to serve dessert, you can at least find some reprieve there.
Food is more expensive no matter where it comes from, and there’s no way around that for the time being. If you’re looking to gather with friends and family, you’re going to spend more than you would have last year, and maybe more than you would have the year before, but after a year apart seeing your loved ones might be worth the extra costs.