I keep seeing it more and more every day. The inflation factor is out there and I am amazed that not many seem to be talking about it as being a problem. It may not be across the board, but food inflation and energy inflation will be making a dent in your finances if they haven’t already.
Food seems to be at the top of my inflation list but it’s more than that. It’s a huge chunk of your annual budget. The average U.S. household spends $7,800 a year on food!
Today’s post will talk about inflation in 2021 and look at some of the things you can do to fight back (particularly when it comes to food and energy). You have the ability to play defense against it, but you first have to face the realities of it. You aren’t hearing enough about it and it’s creeping up on you steadily.
Some Surprising Facts
While it’s true that overall U.S. inflation is not at an alarming rate right now, it is on the rise compared to previous numbers. The January inflation numbers are up about 13% over the 2020 numbers from an annual rate of 1.234% to a rate of 1.400%.
According to the Consumer Price Index (CPI) food inflation is one of the most noticeable and important increases. The CPI report shows that the rise in food inflation was the largest amount of any category (other than vehicles) for the year 2020.
Why Is This Happening Right Now?
This upward trend in food prices has gotten worse over the year as the nation has becomes even more food insecure and it will grow as the pandemic continues into the spring and the approaching planting season.
It’s a catch-22. It’s happening because so much of the food being raised right now, all over the world, is being wasted. With restaurants being shuttered and dining in them so curtailed, restaurants are not buying food as much—or worse not at all if they are closed—and so the resources that produce the foods are really hurting too.
In some cases, these foods are rotting on the vine and even are being plowed under or just destroyed due to those sales drops. Because of that, prices on what they are able to sell are going up!
Until the pandemic is under control, and more restaurants return to full business, this inflation trend is bound to continue. Who suffers the most?
Fixed income recipients feel the pinch because as prices go up, income doesn’t also go up. If you got a stimulus check (or 2, or 3) and/or you expect to see your wages increase when minimum wages go up, will it help? Maybe, but when will those things happen and how much will change, especially if you do not have a job?
Since people tend to spend more cash during times of high inflation, national savings decreases. This will affect your emergency funds and even your retirement savings, especially if you aren’t working.
And like the restaurants, many other companies will go out of business because of the losses incurred due to inflation.
Fighting Back at Food Inflation
I know you have heard some of this before (even from me), but the way to fight inflation and save money has not changed. Of course doing it isn’t just talking about it. It takes actions. Simply, here are the things that you can actually do and it will impact you money every week if you do it!
Keep a Price Book
Keeping a price book and recording the prices of foods you buy on a frequent basis is the first step in lowering your food costs. A lot of people say that they don’t need to keep a price book because they can keep it all in their heads. You may know the prices of a couple of items and shop one store, but it becomes more difficult when you have to remember the prices of dozens of food items and you want to comparison shop in order to save money.
Buy Generic and Private Label Brands
One of the most effective ways to cut down on food prices is to make the switch from brand name products to private label or generics. Many are actually made by the national brand companies just using different labels.
Switching to private label products can offer significant savings of up to 20-50%. Try it and if you like it, keep it up.
Stop Ordering In/Taking Out
It is always going to be more expensive to eat from the outside sources and even though it will hurt the local business, don’t lean on it as you main source of food. It isn’t money wise and it’s lazy to boot. A treat once in a while is fine, but not four, five, or six times a week. Get wise and save your money the easiest way possible.
Shift to Less Expensive Homemade Meals
Through effective and creative meal planning you can look for ways to shift more of your daily calories to less expensive and even healthier foods. For example, for breakfast, instead of having corn flakes you could switch to oatmeal which costs 33% less per ounce. You can also use more rice rather than potatoes to save on your cost of servings per pound.
One of your best investments is to stock up on foods you eat on a frequent basis. I only recommend stockpiling foods you will use and normally eat and do it after you determine it is at its best sale prices. It’s so much better to shop from your own pantry and pay that sale price every time you do!
If you’re one of those people who hasn’t gotten around to clipping coupons, now is the time to start. One word of caution: don’t let a great coupon sucker you into buying something you wouldn’t ordinarily buy.
Also, make sure you use the digital clipless coupons and your store’s free loyalty shopper card for even more deals and discounts!
You may even be able to help others who are need to visit food bank and assistance pantries. You can use coupons as a way to get great deals on canned foods and then drop them at a collection site. Coupons then can multiply their impact helping others not go hungry.
Increasing Fuel Costs
For most of the months that the coronavirus (COVID-19) was causing widespread economic damage, consumers could at least console themselves with falling gasoline prices. That is no longer the case.
The AAA Gas Prices Survey shows the national average price of regular gas continues to climb, reaching $2.65 a gallon as of February 22, 2021. Not only is that thirteen cents more than a week ago, it’s eighteen cents more than last year, just before the pandemic hit. It is expected to hit over $3.00 a gallon nationwide by summertime.
The average price of premium gas is now $3.21, twelve cents higher than last week and the average price of diesel fuel is $2.85, nine cents higher than a week ago.
While demand for fuel is still lower than it was before the pandemic, oil prices are rising anyway. The cost of crude is increasing because producers have trimmed supplies and oil speculators are betting that the end of the pandemic, when it arrives, will lead to a huge increase in demand. In the meantime, the price at the pump will continue to go up.
Expectations are that consumers will continue paying more to fill up this month, potentially up to ten cents more a gallon, as fuel pump prices continue to increase.
Inside Your Home
At home, you may have to watch your thermostat to help control heating and air conditioning costs, because they are rising too right now!
We have to consider the effects that the winter storms have inflicted on areas like Texas and other places in the South. The fuel infrastructure needs will translate into higher fuel costs at least until changes are made to obtain more solar and wind sources of power which is still years and years away.
Fighting Back at Energy Inflation
There are things you can do, both at home and in your vehicle, to save money on energy costs.
Find Alternate Transportation
When it comes to driving, put the “brakes on” as much as you can! That means finding alternate ways to travel like buses, trains, subways, even bicycles whenever you can. Try walking to the corner store if it’s doable. We live three blocks from a huge supermarket, but do we ever walk? That’s one way to fight the increase in gas costs.
Tune Up Your Vehicle
Another sure fire cost-saver is keeping your car in the best driving condition to maximize its mileage and its longevity too. Oil changes, tune-ups, and all the care it needs will improve your performance. And avoid premium gasoline for almost every car out there. That’s just a waste of your money in most cases. Check your car manual to be certain about the use of regular gasoline.
Compare Gas Prices
Use Gas Buddy or other local gas price finders and plan your driving to take advantage of the best deals when you need to fill up.
Be Smart with Your Thermostat
Get yourself a programmable thermostat to control your heat and A/C and set the temp up and down as you need and use it. When away at work, you don’t need to warm up your house or cool it off. Wear a sweater if you’re cold and you will not notice a degree or two if you do.
Seal Up the Leaks in Your Home
There are spots where the heating and air conditioning are leaking out of your home. Seal up these gaps using help from your local home improvement store and keep your energy and money inside.
Plan Your Drive
And last, when you do drive, plan out your errands and route so as to maximize your deeds and minimize your miles and cost. Planning once again wins the day!
While many experts are not calling it as I am seeing it, some are starting to look at inflation in several important market sectors like the ones I mention here.
Just as in the old show “Lost in Space” where the robot would shout out “Warning, Warning!”…I’m shouting it here right now. Inflation is here and it’s growing and it’s totally up to you how you handle it.
One other note: If and when the minimum wage increases, it is bound to have some effect on prices you pay as it trickles down to the retail worker. Since payroll is the biggest expense that an employer has, there will be either job layoffs or price increases to make up for the added expense, or both. We may be years from a nationwide $15 an hour minimum wage, but it is coming.
How are you making out with the cost of…everything? Are you managing or are you seeking help from government agencies? Are the stimulus (rescue) checks helping you? What are you going to do to defend yourself against our common enemy…inflation!