Not this again.
The decision by OPEC and its oil-exporting allies to reduce oil production by two-million barrels a day is expected to cause gasoline prices to rise. They had been trending down toward $3 a gallon, but GasBuddy.com’s Patrick De Haan says now prices could increase as much as 30-cents a gallon.
That is just what American’s don’t need.
Inflation is running at over eight percent annually, making everything more expensive and harder for Americans, especially those in the middle and lower income brackets, to keep up, much less get ahead. They spend a larger share of their income on life’s necessities.
The median household income in West Virginia is only $48,000, one of the lowest in the nation. Inflation is causing many West Virginians who are just above the poverty line and not eligible for government assistance to make difficult decisions.
That is particularly evident at the grocery store.
The Economic Research Service from the U.S. Agriculture Department reports that “Americans in the poorest 20 percent of households spent between 28.8 percent and 42.6 percent of their annual before-tax income on food,” compared with only six to ten percent by higher-income earners.
And food prices are rising faster than the overall inflation rate. Consumer Price Index figures show the cost of food—not including restaurant prices—rose 13.5 percent from August 2021 to August 2022. Meat, poultry and dairy products were up 16 percent. Processed fruits and vegetables rose 14 percent, while egg prices shot up 40 percent.
As I reported yesterday, winter heating bills are expected to rise significantly because the price for coal and natural gas have reached historic highs.
While it costs more just to live, wages are not rising as fast as prices.
A study by the Federal Reserve Bank of Dallas found that, “A majority of employed workers’ real (inflated adjusted) wages have failed to keep up with inflation in the past year. For these workers, the median decline in real wages is a little more than 8.5 percent.”
That means many families are falling behind. Meanwhile, WalletHub reports that credit card debt, which fell in 2020, is climbing again. The national average household’s credit card balance in the second quarter of this year was just under $9,000. In West Virginia, the average is $7,200.
That debt is becoming more expensive because of rising interest rates. The cost of credit card debt, car loans and home mortgages are all starting to tick upward, according to the Federal Reserve.
Former Federal Reserve Chairman Alan Greenspan said, “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.”
Economists predict an economic slowdown, which could soon help to tamp down inflation. That’s cold comfort for now.