Inflation’s Mixed Basket: 7 Things That Will Cost You More—And 3 That Will Cost You Less—In The Covid Recovery Economy

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  • Source: Forbes
  • 04/26/2021
By most accounts, the U.S economy is set to boom this summer: pent-up pandemic savings are burning a hole in consumers’ pockets, vaccines are rolling out and trillions of dollars in federal stimulus spending are working their way through the economy—not to mention the warmer weather ahead.

But the picture isn’t all rosy: some are worried the recovery might actually be too hot and prompt runaway inflation that erodes purchasing power and hurts households’ bottom lines. 

Consumer price data for March painted a confusing picture—prices surged 2.6% on a year-over-year basis, partially because prices dropped to such low levels at the onset of the pandemic. But they also rose 0.6% between February and March—their largest monthly gain since August 2012. Experts, including Federal Reserve chair Jerome Powell and Biden Administration economists, have repeatedly said they expect a short-term bump in inflation as the economy recovers. They’ve emphasized that they expect this spike to be transitory and abate after conditions return to normal. 

Consumers might not share that attitude: in a recent poll by CivicScience, 87% of American adults said they were “very” or “somewhat” concerned about rising costs of household expenses. And some are changing their spending habits already, with 27% of people reporting that they had been buying less because prices are higher.

Threat of dangerous inflation or no, those consumers are right about one thing. The pandemic has already had a major impact on prices—and it’s not all about stimulus money. Supply chain disruptions, changes to pre-pandemic supply and demand patterns and businesses eager to capitalize on the recovery boom all have the potential to drive prices up, and the shift is already happening.

Here are seven things you can expect to pay more for as the economy recovers—plus three things that will cost you less.

Wine, beer and liquor

Alcohol prices—including wine, beer and spirits—rose 2% in the year ended February 2021, according to data from the U.S. Bureau of Economic Analysis. Restaurant sales of alcohol plummeted during the pandemic, but online sales soared. A January reportfrom Silicon Valley Bank predicted that wine sales and consumption will continue their upward trend in 2021 as the economy reopens, but noted the boost “may not be sustainable” after 2022. 

A used car

A combination of pandemic-driven changes on the consumer front—moves to the suburbs, working from home, stimulus checks and excess savings—and a shortage of new cars thanks to supply chain issues and pandemic production slowdowns have sent prices for pre-owned cars soaring. Wholesale used car prices jumped an eye-watering 26% in March on a year-over-year basis, according to Cox Automotive.  

Tampons, diapers and toilet paper
Consumer giant Procter & Gamble announced last week that it plans to hike prices on a variety of products in its baby care, feminine care and adult incontinence products this fall because of rising commodity costs. Mainstream baby care brands Luvs and Pampers are manufactured by Procter & Gamble, as are feminine care brands Always and Tampax. 

P&G followed rival Kimberly-Clark, which has said it will hike its own prices in June for the same reason. Kimberly-Clark makes Huggies, Pull-Ups, Cottonelle and Scott toilet paper. 

Home gardening supplies

Revamping your yard this year could be a little more costly than in years past thanks to a huge boom in home gardening during the pandemic. A survey conducted by the Freedonia Group in August found that 26% of adults had taken up food gardening during the pandemic—a trend that has also created shortages of certain types of seeds, NPR reported.

The price of seeds, flowers and potted plants surged more than 10.5% between February 2020 and February 2021, according to BEA data.  
Lower Falls Wine by Didriks is licensed under Attribution 2.0 Generic (CC BY 2.0)

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