The inflation crisis is biting deeper into Americans’ pockets. The latest evidence is $10 for a loaf of bread.
A Chicago-based restaurant began selling 2-pound loaves of their bread for a whopping $10 each hoping to offset higher costs for flour, eggs, butter, and other ingredients.
They are not the only dining establishments implementing heart-burning increases. In addition to raising prices on appetizers and entrees, some restaurants have stopped offering bread for free as a part of the dining experience.
Bread prices and prices on commodities have been skyrocketing nearly across the board over the past year. Meanwhile, earnings are not keeping pace. Inflation continues to accelerate leaving hard-working Americans with less and less to live off of.
As businesses raise prices to cover their rising costs in inputs, transportation, and labor consumers cut back on purchases to stretch their budgets. We are stuck in a price spiral that grows worse by the day.
Americans should know that many of these price hikes could have been avoided. We did not have to end up with levels of inflation not seen in generations.
Fiscal and monetary decisions made in Washington fueled this inflation. Now, instead of acknowledging the error of their ways, President Biden and his liberal colleagues in Congress want to press the gas on more inflation-fueling spending. If they are successful in passing another trillion dollars of spending, inflation will further eat away at whatever income Americans have left.
What’s happening
Inflation rose higher than expected to 9.1% in June from a year prior. For yet another month, the inflation rate is hovering at or above a 40-year high.
However, that headline number hides just how high prices are on basic grocery basket goods. As our monthly Inflation Tracker demonstrates, the prices of many goods have risen by double digits:
- Eggs: +33.1 %
- Chicken: +18.6%
- Milk: +16.4%
- Cereal: +14.2%
- Bread: +10.8%
Many input products for bread face significant price increases too:
- Flour: +19.2%
- Butter: +26.3%
- Salt: +11.9%
- Sugar: +11.4%
- Bakeware and cookware: +9.6%
These are just for bread but many other items are up significantly. As a result, eating at home is costing 12.2% more now than one year ago.
On top of grocery store inflation, prices at the pump are up 59.9%, and home gas bills are up 38.4%. Clothing, tools, and beauty services are all up.
Shelter costs–one of the biggest single item expenses in a household budget–are up 5.6%. That underestimates rising rent prices.
Households are altering their spending behavior to accommodate price increases. For low-income and elderly households, these price increases are especially painful, because they spend more of their budgets proportionately on groceries than other groups.
Americans are right to be worried
A significant majority of adults are worried about the economy. In new polling, just 17% rated the economy positively, the lowest in nearly 10 years.
According to a new CNN poll this week, 75% of Americans view inflation as their top economic concern. And 75% of them disapprove of how President Biden is handling inflation.
The majority of Americans recognize that the only solutions the White House has floated will do little or nothing to control costs now.
The President wants to lower prescription drug costs, extend Affordable Care Act subsidies and create a “clean energy” industry to shift us away from oil and gas. The first two are minor issues when a family can’t afford bread, milk, or meat. The third is partly driving sky-high gas prices.
Energy powers our vehicles, but oil is also an input in many products and packaging as well as fueling transportation and delivery of goods. When energy prices rise, prices on everything else rise.
President Biden and his administration have called for the end to oil and gas discouraging long-term investment, then blamed the industry for rising prices now.
As my colleague Mandy Gunesekara explained:
Record-breaking gas prices are a direct cause of President Biden’s assault on U.S. oil and gas. The cancellation of the Keystone XL Pipeline, regional drilling moratoriums, shuttered lease sales, and new red tape, are just a few examples of the more than 100 actions his administration and allies in Congress have taken to restrict the production of oil and gas.
Energy policy alone is not the only driver of inflation. Covid-related shutdowns in other countries have disrupted the production of goods we import.
At the same time, when the economy was reopening in the spring of 2021, liberals in Congress passed the $1.9 trillion American Rescue Plan, which provided many direct payments to households from stimulus checks to expanded child tax credits. All of that cash spurred demand for goods and services–at a moment when supply was constrained–and discouraged workers from getting jobs, thereby forcing businesses to raise wages to attract workers and raise prices to cover the wage increases.
Meanwhile, the Federal Reserve printed money to fund this massive federal spending while keeping interest rates at or near zero. This bill single-handedly fueled a significant amount of inflation according to the San Francisco Federal Reserve.
The Fed is now trying to tame inflation by raising interest rates to cool spending in the economy. Those impacts will take time to be felt across the economy. The Fed was late to acknowledge rising inflation or do something about it.
In the meantime, President Biden and Congress should halt efforts to pass trillions of dollars in new spending on subsidies to prop up “green” industries, entitlements, or other plans being considered. Otherwise, they will accelerate demand and fuel price increases once again.
The Senate is poised to consider a slimmed-down Build Back Better bill within the next few weeks, before August recess. So far, West Virginia Democratic Senator Joe Manchin has objected to passing trillions of dollars and tax increases as he did last year. However, he supports some new spending. Any new federal spending would be unwise right now.
For now, $10 bread is rare, but if Congress is reckless about fiscal policy, we may all be eating $10 loaves and that’s a meal no one wants.