(WXYZ) — Skyrocketing prices from food to fuel and countless other goods is having a massive effect on both our local and national economies. Countless families say it’s becoming increasingly difficult to make ends meet. Now, experts are weighing in on how long it could last and the cause.
- What's fueling the massive spike in home and rent prices across metro Detroit?
- 'This is unprecedented.' Here's why prices for used cars are at an all-time high
- Gas prices spike 15 cents in Michigan, highest average since October 2014
- Lumber prices nearly four times higher than last year, hurting home builders & buyers
“You get less for more money now, than what you would normally get before the pandemic,” said Johnettia Jackson of Detroit.
As a single mother of four, Johnettia knows the impact of soaring prices firsthand.
Courtesy U.S. Department of Labor, Consumer Price Index for All Urban Consumers (CPI-U)
When asked how have prices impacted decision-making for the family, she replied, "Dramatically. Like cutting grass and gas for the lawnmower.”
A lesson Johnettia’s 13-year-old son Jeremiah is also learning each time his mother sends him to the nearby grocery store with a list to fill.
“She sends you with a certain amount of money and expects to have a certain amount back. You come back and don’t have that amount, and she says, 'Where’s the rest?'” said Jeremiah.
According to statistics from the Organization for Economic Cooperation and Development, in April of 2021, annual inflation increased sharply in the U.S. to 4.2 percent, up from just 2.6 percent in March.
Gas prices have also jumped from June of 2020 to June of 2021 by roughly a dollar for several reasons.
Finance professor Matt Roling with Wayne State University breaks down what is fueling it all.
"It’s easy to forget the fact a year ago, the cost of a barrel of oil was actually in negative territory. When the world shut down in March or April, the price of a barrel of oil dropped to the floor. As demand for everything from cars to airfare, to cruise lines picks up, the price ... for a barrel has spiked,” said Matt.
And overall, he says inflation is tied directly to the economy re-opening: more stimulus money in people’s pockets and limited supply.
“As the economy begins to reopen, we see the supply of things like homes, cars, lumber, airfare get squeezed as supply races to catch up with demand,” said Matt.
Also weighing in is economist Steve Meyer with the pork industry, who says consumers are willing to pay more even at hog wild prices.
“We went from $80 to well over $120 at times this summer on hog prices and it’s all demand-driven,” said Steve Meyer, consulting economist with Michigan Pork Producers Association.
He added, “We have a lot of uncertainty with feed costs, and building costs, and exports.”
Lumber prices are also heading up to nearly 4 times higher than last year, according to home building experts. It's partly due to a red-hot housing market.
It's become such a challenge, Michigan’s home builder associations are now joining others to ask Congress for help.
In the meantime on Detroit's east side, Johnettia is still having sticker shock at some of the prices on goods.
“$5 for a gallon of milk is outrageous,” she said.
The Jackson family relies on a single income to survive, Johnettia’s job as a frontline worker.
As the community faces adversity, she believes the government must also play a role in combating inflation that shows no sign of stopping.
“Managing your money. That’s the biggest thing,“ said Johnettia. "Budget, budget, budget. Down to the last penny.”
Matt Roling says expect high gas prices to last at least for a few more months, with more people choosing to drive to summertime destinations, rather than fly.