Costs May Climb In 2013

Costs May Climb In 2013

That is not to say that costs have not been creeping up slowly over the past few years.  The only one that thinks that costs are stable is the United States Government -and yes, possibly Ben Bernanke of the Federal Reserve.  Grocery prices in the United States have risen steadily for decades but they have increased at a faster rate in the last few months.  The highest increase will be in fresh vegetables which are forecasted to go up 4% to 5%.  Coffee, for instance, is up 40% and celery is up 28%.  Meat is becoming more expensive with livestock prices up 138% since March of 2009.  Recent articles have addressed the price of milk which could go up to $6 or $7 dollars per gallon because the price of milk at the supermarket is artificially subsidized by the Government.  If this subsidy is removed, the artificially low prices will be left to skyrocket up.

A lot of people are blaming the Federal Reserve.  All of the quantitative easing that the Fed has done has flooded the financial markets with money.  Much of this money has pumped up the prices of oil, gold, and agricultural commodities.  When the amount of money in an economy goes up the purchasing value of all the existing money goes down.  Adding to these factors in 2010 and 2011, we have seen an unprecedented wave of natural disasters and crazy weather.  In addition, almost one third of all the corn grown in the United States is used for fuel.

Satellite television will rise by an average of 4.5% starting on February 7th which company officials attributed to an 8% increase in programming costs.  Stamps, by the way, will go up to 46 cents on January 27th while a postcard stamp will rise to 33 cents.  However, with the USPS facing a record deficit of $15.9 billion dollars other postage increases will take a bigger hit to your wallet.  Shipping costs will rise by an average of 4%, while the cost of using popular priority mail flat rate boxes and envelopes will go up by as much as 9%.  Not to be left out, Federal Express and United Parcel Service have also announced 2013 rate hikes that average about 5%.

T-Mobile customers will say goodbye to the $200 smart phone upgrades this year, meaning the purchase price of a smart phone will jump by hundreds of dollars.  Last month, T-Mobile announced that it would get rid of its smart phone subsidies altogether in 2013.  The phone costs will be offset by monthly financing options and lower rates than other providers.

Health care premiums are projected to jump 6.3%.  Average employee costs, including premiums and out of pocket costs, are expected to rise to an average of $4,814 up from $4,400 in 2012.  Overall health costs in the United States are also expected to jump by 7.5% in 2013.

While modest annual price increases are forecast for most new model cars, some manufacturers are upping their 2013 sticker prices by as much as $1,000 or more.  A 2013 Hyundai Elantra sedan will cost $1,350 more than last year’s comparable model.  The outlook for oil prices for 2013 is somewhat unchanged but that could also change at any time due to so many factors that they are too numerous to mention.  Gasoline could easily hit $4.00 a gallon tomorrow so if you budget your money carefully for 2013, please don’t plan on any significant decrease.

Bottom line, most U.S. employees can expect a median base salary increase in 2013 of 3%.  However, after factoring in the annualized consumer price index growth of 2.2%, the result is a net gain of 0.8%.  Irrespective of taxes, your wages for next year will be somewhat flat.  Our economy is growing slowly, very slowly but we are facing a hidden inflationary factor that is starting to raise its ugly head.  I doubt very much if President Obama will ask the question in 2013 “are you better off than you were four years ago” as he would not get the answer that he was looking for.

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Written by
Donald Wittmer