I know the Government likes to preach things like zero inflation and stable pricing but the reality of the situation is that prices are going up. I am not even sure that Ben Bernanke has ever been in a grocery store and I am positive that he doesn’t own a car. At least, he never takes it to a gas station.
I think what we are facing today is a type of silent, creeping inflation that seems to add a penny here and a penny there. Gasoline is on the rise. The excuses are endless: speculation in the commodities market, a switch from winter gasoline to a summer blend, a broken valve in British Columbia, on and on. I am glad that the newer stations all have electronic signs for the ever changing prices. I would hate to be the guy that has to stand out there in the cold and change the price every hour or two from $3.42.9 to $3.49.9 per gallon.
How about food prices? Anyone that has been in a grocery store in the last few months cannot help see the slow rise in food costs. Wait until the new transportation costs start to hit the grocery stores. It is more difficult to pick up the rising cost of food than other items. Part of this has to do with store brands, name brands, loss leaders or items to draw you into the store, and the never ending “sales.” Next time that you are in a check-out lane, try to follow the electronic pricing screen as the clerk scans your food purchases. If you don’t get a headache in the first few minutes, you may make it to the end. However, if you are buying for a family, it is better to check the 10 foot tape that the cashier gives you at the end.
How about utilities? Usually under important information listed at the bottom of the bill, you may pick up things like “On February 8, 2011, the MPSC (Michigan Public Service Commission) issued an Order in Case No. U-16358 approving an increase to the Energy Optimization Surcharge (EOS). Beginning March 1, 2011, the EOS will increase from 0.2434 cents per KWh to 0.2538 cents per kWh. The unmetered service rate will be 1.9%.” Most of us would never spot this and most of us haven’t got a clue as to what the overall effect will be to our energy bill, but, trust me, it all adds up. How about those good old natural gas bills? I remember the day when you got a gas bill for so much money and that was what you paid. Not now. Besides the customer charge, there are charges for gas distribution, energy optimization, gas cost recovery, and the interim rate increase credit. A change in the price of any one of these charges can have an adverse effect on your monthly bill.
Car prices are also going up. The latest trick aimed at confusing buyers is to advertise 2010 models with the newer 2011 models. I was surprised the other day to see how Buick Automobiles have risen in price. You would never know that General Motors was coming out of bankruptcy. I think car pricing is meant to confuse the potential buyer so that he or she has to come into the showroom to see if they can make sense of the advertisement.
Even the local church has had to adjust the suggested weekly donations. I notice that nothing below $10.00 is listed any longer on the Sunday envelope and that this weekly donation rises by increments of $5.00 to a suggested amount of $30.00 with a blank line for those overly generous parishioners that can afford to write in an amount higher than $30.00.
We may never return to the skyrocketing inflation of the ‘70’s where housing prices moved up monthly. However, we are definitely in a cost ratcheting spiral. It is difficult in today’s housing market to get a loan mostly due to a return to more normal purchasing standards like having money to put down on the home, but wait as the banks start to compete for funds in the money market now that the Treasury has to fund the $14 trillion dollar National Debt.