ALEXANDRIA, Va.—Inflation has risen 7.9% over the past 12 months—the highest it has been since January 1982, reports CNBC. Food prices have risen 1%, and food at home jumped 1.4%, both the fastest monthly gains since April 2020.
A Numerator report found that dollar stores showed the largest increase in grocery prices. Grocery prices in the dollar channel are up 14.3% compared with a year ago and up 22.5% versus two years ago.
Gen Z is feeling the impacts of inflation more so than older generations, according to the Numerator report. Millennials, Gen X and boomers are paying prices roughly 11.3% higher than a year ago, while Gen Z consumers are facing an increase of 13.5%.
The study also found that younger consumers were increasingly pessimistic about their financial situations. While Gen Z’s financial outlook has improved in 2022, these consumers are still considerably less likely than older generations to say they feel “good” or “very good” about their financial situations (44% of Gen Z consumers, compared to 51.8% of millennials, 53% of Gen X and 54.8% of boomers+).
With inflation continuing to rise, consumers and businesses alike will need to adapt.
Janet Yellen, U.S. Treasury secretary, says “very uncomfortably high” inflation will persist all year, CNBC reports. She noted that next month’s Labor Department report on inflation will reflect Russian’s war on Ukraine. Just months ago, Yellen had anticipated that improvements in supply-chain issues and rising consumer demand for goods would result in cooling down of inflation by year’s end.
Reuters reports that the U.S. economy may have room for the added pressure of inflation and high gas prices, saying that growth entering 2022 was strong.
"The U.S. has become less sensitive to energy shocks," with a steady decline in the share of income spent on energy, Bank of America economists wrote in a note. "With Omicron cases fading, the reopening of the service sector has resumed ... Excess savings built up over the last two years can fund this rebound."
Looking to past oil shocks, U.S. households adapt, and one 2008 study found that when gas prices were high then, consumers increasingly substituted cheaper brands when shopping. This time, consumers may head to dollar channels and private labels. Reuters says that Dollar General stock prices are up 9% since the Ukraine war began.
Gene Marks, founder of The Marks Group, a small-business consulting firm, recently wrote an opinion piece in The Hill, saying that he isn’t concerned about inflation.
“It’s a market economy. And the market is shifting. So we shift with it. The economy doesn't go away when prices go up. Things adjust. People spend differently. But they still spend,” he wrote. “People don’t go into caves when prices rise. They still buy and sell.”
Marks says that he is cutting costs and raising prices, just like 68% of other small businesses have done, and he admits that his customers aren’t happy about it, but they understand.
“It’s not as if they’re not expecting it. That’s because they're doing the same with their customers. My competitors are doing the same. Big brands are doing the same,” he wrote.
“So, whether you’re a business owner like me or not, please don't worry so much about inflation,” he advises. “I'm not. It’s happened before, and it will happen again. Let's just make sure that we're smart about how we’re managing our money, that we're paying attention to the economy and we’re watching our pennies. But then again, shouldn't we always be doing that?”