When Chipotle CMG,
+ 0.02%
CEO Brian Niccol said the company had raised the prices of its menus by almost 4%, some customers thought they knew exactly what to blame for the more expensive burritos: inflation.

“Let’s face it, Chipotle is the first of many companies to start raising prices,” one person tweeted. “Inflation is real and [it’s] will be reflected everywhere.

Chipotle, however, told MarketWatch that the price increase had little to do with inflation.

“The recent price increase is intended to offset the dollar cost of our pay rise, not to offset commodity inflation,” Erin Wolford, senior spokesperson for Chipotle, told MarketWatch. Last month, the fast food chain announced plans to raise wages so that employees can earn an average of $ 15 an hour by the end of June.

Rental cars and beef cost 12.1% and 6.4% more last month, respectively, compared to April

But the tweet wasn’t entirely wrong – consumers pay more for a plethora of products.

Rental cars, plane tickets and uncooked roast beef cost 12.1%, 7% and 6.4% more last month, respectively, compared to April, according to the latest monthly report from the Bureau of Labor Statistics which tracks how much Americans pay for nearly 80,000 different goods and services.

The report, known as the Consumer Price Index, uses all the data on the prices of individual goods and services to estimate how much more or less Americans can expect to pay for goods at all levels.

Data from the most recent CPI report estimates that Americans paid 0.6% more for merchandise overall compared to the previous month and 5% more compared to last May.

What inflation is and what it is not

By definition, inflation is a overall rising prices of almost all goods and services – so yes, people in the United States are experiencing inflation right now.

But just because Chipotle charges more for his food doesn’t inherently mean there’s inflation, said Michael Weber, an economist at the University of Chicago’s Booth School of Business.

“Prices or costs go up and down all the time,” he said. “If, for a whole range of products, prices increase systematically and persistently, this is what we call inflation.

Example: At the height of the pandemic, a three 8 oz. bottles of Purell was listed for almost $ 70 on Amazon AMZN,
+ 1.17%
– more than four times what consumers paid for the same pack before the pandemic, according to CamelCamelCamel.com, a site that tracks prices for goods listed on Amazon. (Amazon did not respond to MarketWatch’s request for comment.)

“If, for a whole range of goods, prices increase systematically and persistently, this is what we call inflation”

– Michael Weber, economist at the Booth School of Business at the University of Chicago

But consumers weren’t paying four times as much for everything they bought then, in fact, CPI data showed they were paying less for most goods and services in March, April and May. last.

Still, it’s easy to get lost on what inflation is and what it isn’t, said Sarah Foster, analyst at Bankrate.com.

“If you’re someone who goes to the grocery store or even the gas station regularly and you notice those prices going up, it doesn’t always necessarily count as inflation,” she said.

Inflation is when “the cost of living has generally gone up and what you have in your wallet today can’t really buy as much as you could have bought a year ago”.

It is “normal” that prices increase

“In normal times, prices tend to increase by around 2% in any given year,” said Gregory Daco, chief US economist at Oxford Economics.

But lately, “the price increases are faster than they would otherwise be in normal times.”

The pandemic, of course, has been anything but normal.

Movie theaters, restaurants, hair salons, gyms, and clothing stores had locks on their doors for months – and even when they were allowed to reopen, most consumers didn’t immediately rush out.

“In normal times, prices tend to increase by around 2% in any given year”

– Gregory Daco, Chief US Economist at Oxford Economics

That has changed as more Americans get vaccinated against the coronavirus and most states have lifted major pandemic restrictions, including mask warrants.

It makes sense that rental cars and trucks cost 12.1% more than last year, Daco said.

“Prices are rising because supply has not yet met demand,” he added. And car rental companies can’t easily get their hands on more cars “because the car companies sold the cars during the COVID crisis.”

Chip shortages, which disrupt the supply chain for a range of products, are pushing the prices of new cars and trucks even higher.

Eventually, the supply of chips will increase to meet demand – or consumers may look for other transportation options – either way, prices are unlikely to stay where they are, Daco said. So is the Purell three-bottle pack which can now be purchased for $ 14.67 on Amazon.

The verdict is yet to be found on whether the inflation Americans are currently experiencing will subside once people fully resume their pre-pandemic lives.

One of America’s most important economic figures, Federal Reserve Chairman Jerome Powell, thinks so.

Notice: Here’s why higher prices for car rentals, airline tickets and blouses won’t lead to higher inflation

MarketWatch wants to hear from you! What has cost you the most money lately? Has inflation caused you to change your lifestyle?

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