Here’s Why the Cost of Everything You Buy is Going Up

Written by adminJuly 16, 2018
Life Style

If you’ve been to the grocery store lately, you might’ve already noticed that a dollar seems to be stretching a lot less further than a few months ago. In fact, the Consumer Price Index is up 2.9% since last month, it’s fastest growth since 2012.

So, what’s behind this sudden rapid growth of inflation? There are several answers for this. Overall, coming out of the recession, supply and demand is changing the way we consume things. Once stagnant sales are again in overdrive, propelled forward by recent tax cuts and an increase in employment.

Income has risen as well, but it’s not enough to overcome this new bout of inflation. It doesn’t matter if people have more of their own money if everything starts getting more expensive, essentially negating potential budget increases.

The main reason for the inflation hike is the price of oil. Since 2015, we’ve been enjoying a brief reprieve from high oil costs that threatened to break almost $4 per gallon. Oil prices that were once $30/barrel are now up to $70/barrel as OPEC can’t seem to make up its mind about drilling to keep up with demand.

When the price of gas goes up, so does everything else. Gas is used in nearly every industry, especially for shipping, so those costs are usually handed down to the consumer.

The demand for housing has skyrocketed as well. It’s not just places like Seattle and New York seeing growth in the markets, but also a lot of the smaller rural towns as well. When there’s higher demand, it can cause prices to inflate, forcing people to pay more each month.

Interest rates tend to shoot higher as well. The rates are lowered when the economy isn’t doing so well to help people get back on their feet, but when unemployment is down and wages are up, the government feels confident enough to hike the rates.

And then, there are the tariffs. It’s not just the tariffs on steel, that have made things like laundry equipment and vehicles 13% more expensive, but the retaliatory tariffs on U.S. agriculture that is sure to impact the price of food.

The price of eggs is up 14%. Gardening and lawn care is up 7.6%.

It’s looking to be an expensive summer across the country. We can only hope that gas prices get relieved, which will help cut some of this inflation going into the holiday seasons. A good indicator will be how well the Back-to-School shopping season does as it begins to kick off going into August.

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OPEC Agrees to New Deal to Bring Down Oil Prices

Written by adminJune 25, 2018
Life Style

It’s often known that in the summer, you’ll be paying more for gas. Rising prices typically signal a boost in demand as more people decide to go on trips and family vacations during the summer months.

Last Friday, President Trump made a tweet that might’ve spurred OPEC into action, stating that he hopes they will increase their output substantially to keep the price of oil down.

It wasn’t but a short time later when OPEC announced that they would indeed boost their production, flooding the market with oil and ultimately lowering the price at the pump.

In 2016, gas prices were falling significantly to the point where the major oil companies were having to lay off thousands of workers collectively to maintain profits. OPEC struck a deal with Russia and other major oil producers to curb production and cut the excess supply that kept the prices ridiculously low.

A lot can change in a few years, as now the world is concerned about an oil shortage. Prices have spiked 20% as demand has risen due to an improved economy in the U.S. and outages in major oil producing countries like Venezuela.

OPEC looks to increase the production by one million barrels, which will help ease some of those concerns and lower the prices, but the concern is that they would need to increase the output by 2 million barrels to keep up with current demand. That’s going to be a problem, as a lot of OPEC members will struggle to increase their production.

It’s expected that the increase will hit the global markets in July, but it has not yet been decided which countries would ramp up their production. In fact, gas prices rose at the end of last week as many investors actually expected to hear better news.

Cornelia Meyer, energy analyst and CEO of MRL Corporation, said last week that the OPEC leaders were “there own worst enemies” and that the current increase is “enough” to supply demand.

While we as consumers can be glad for lower prices this summer, a shortage is still expected later in the year unless OPEC can figure it out before then.

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