Inflation has climbed to 8.6 percent since May of 2022, the highest we’ve seen since 1981. According to the Consumer Price Index (CPI), food costs have risen 10 percent, and energy costs have risen to a whopping 34.6 percent. The pinch is being felt across the nation, and uncertainty seems to be the only constant.
Americans are suffering daily, and so are the farmers supplying our food. Input costs for farms are not matching the 8.6 percent inflation, which could lead to devastating consequences. Fertilizers, pesticides, and herbicides have risen to quadruple the traditional price. The kicker is that despite the near 300 percent increase in most input costs, farmers are not getting a premium price for their produce.
For any business to remain open, they need to be profitable. Pre-inflation, farmers already had tight profit margins. Often the farm will take a loss but make it up in other areas of the business if they’re vertically integrated. For example, if a farmer owns the farm, shipping trucks, and possibly a retail store, although the farm takes a hit from high input costs, they can remain profitable between the shipping and retail. Farmers who don’t own other aspects of the supply chain are being pushed out. One California farmer who grows melons gave an example of putting $10,000 worth of melons on a truck but spending $10,000 to ship them across the country.
Shortages & Costs
Inevitably if inflation continues to rise or even stays the same, many farmers won’t be able to produce. We’re seeing big businesses buy up farmland that farmers can no longer afford and sit on the real estate. The business move here is to hang onto that investment and wait until the value increases.
Land that is no longer being farmed will create less product. Less product means higher costs on the products that are available. It also could mean fewer available products.
Some farmers predict much higher food costs by the end of Q4, sometime around Christmas of 2022. The thought is that vendors who service the big retailers like Walmart, Target, and other big-box grocers are on fixed prices under contract. Come Q4, many of those contracts are up, and these vendors will look to recoup their losses and hedge their bets going forward. If the inflationary outlook is still as gloom around Christmas as it is today, shelves could be more empty and cost a lot more.
Before going out to hoard non-perishable foods, there are practical solutions to begin considering and putting into practice. It may require a new perspective on how you shop and operate daily, but keeping your thought process practical can save the money you’ll need to buy food.
Here are some practical adjustments you can make to get the most out of your dollar and prepare a new mindset for the days to come:
Coupon Shopping Apps
The days of coupon clipping are not over but have evolved. Dozens of apps and websites can save a tremendous amount on groceries. To be effective, you may have to readjust your buying habits. Typically, people go to the store every few days or weeks to restock. Getting the most out of digital coupons will require forethought with a dash of planning. If you’re up to the task, here are a few places to explore:
- Hip2Save is an online site that hosts a gigantic database of printable coupons. Click on coupons, then select your category. If you need it, they likely have a coupon for it.
- Slickdeals is another online favorite because you can set up deal alerts. If you have items you can’t do without and want to save a buck, customize your alerts for it.
- Retailmenot is another excellent resource. Not only do they have great deals, but they also offer a cash-back program. Please take a moment to look it up on the site.
Avoid Major Purchases
Recently the Federal Reserve raised interest rates. Although the goal is to slow spending, it could send us into a recession. Regardless, elevated interest rates make borrowing money more expensive. Significant purchases that require a loan like a car, home, or big appliances should be avoided until inflation starts to come down. Some things are unavoidable, but explore lease-to-buy options before jumping into a higher interest loan.
Control Utilities & Gas Output
Low-hanging fruit can be found inside the home. It’s summertime which brings the heat to most places throughout the country. Before leaving for work, turn the air up to prevent the AC from kicking on. Turn off any fans, lights, or other appliances running while you’re not home. Remember, every item running drives up your utility bill.
Because gas prices are out of control, it’s best to plan out when you will start your engine. Whether running errands, going to work, dropping the kids off at summer camp, or anything that requires burning gas, you should maximize the trip. Pull up the maps app on your smartphone to plan your most efficient route, given the stops you’ll have to make. You’d be surprised at how much you’ll save at the pump.
Eliminate High-Interest Debt
Perhaps the most significant risk to our financial health during an inflationary period is high-interest debt. Mainly credit card debt carried over month to month. All the extra money you’re saving should be put toward this debt. If not, you’re trying to fill a bucket with a hole in the bottom.
Contact a professional if you’ve tried to pay down debt with no success. Advocate Debt Relief has highly skilled analysts who can help you zero in on a plan that can lead to financial freedom.