Inflation reduces purchasing power but consumers carry on – The Daily Gazette

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People sometimes spend differently as inflation bites into the value of their dollars.

But sales tax collections this year are up sharply from 2021, suggesting New Yorkers aren’t cutting spending — yet.

The consumer price index jumped 8.6% from May 2021 to May 2022, the biggest one-year jump since December 1981 and far more than most people will earn from wage increases This year. Some of the biggest price increases have been in food and energy – two things almost no one can do without.

The Daily Gazette asked a handful of traders, large and small, what they saw in their customers’ spending habits.

“People are shocked by the stickers of what things cost,” said Andrew Crounse, owner of Glenville Beverage.

They are not buying cheaper or cheaper, although he expects one or the other to happen eventually if inflation does not moderate.

Clouding of the equation: the weather was nice and beer sales jumped on a nice weekend.

“It’s a little hard to say at this point how much the economy is affecting him,” Crounse said. “I’m flat. I’m not down.

Price Chopper/Market 32 ​​Chairman Blaine Bringhurst said this period of inflation was the worst he had seen in 40 years in the supermarket industry, and that this is different inflation, supply chain limitations forcing strategy shifts for grocers stocking shelves and shoppers picking items. off those shelves.

Just one example of many: General Mills has stopped packaging Cheerios in 10-ounce cans. So this particular breakfast staple is automatically more expensive – even though the larger size is cheaper per ounce, just putting the box on the table is a bigger buy-in, which doesn’t is not easy for everyone.

“Many of our clients are on fixed incomes and have little money to spend,” Bringhurst said.

This is actually a widespread pandemic-era trend in supermarkets: larger, more expensive units are preferred over smaller units, leading to an overall decrease in the number of units sold, he said. he declares.

The Schenectady-based supermarket chain has taken a number of steps to help shoppers cope with price increases, including a focus on its Advantage loyalty card and more daily low prices to complement weekly promotions which she has used extensively over the years.

Then there is the house brand.

“Price Chopper has worked for years to bring our own brand to the fore,” said Bringhurst. “They’re also more expensive than two years ago, but they’re significantly cheaper than national brands.”

MORE MONEY

Some of these increases have a costly legacy: the average interest rate on a 30-year fixed-rate mortgage rose from 2.93% to 5.78% from May 2021 to May 2022, pushing the $250,000 loan repayment cost from $376,000 to $527,000 over 360 months.

The homes on which these mortgages are lent also cost more: the Greater Capital Association of Realtors reports that the median selling price of a single-family home in the Capital Region was $278,000 in May, up 10% compared to $252,000 a year earlier.

More price hikes are on the way: health insurers are asking for rate increases of 16% to 18% for 2023.

Some increases are hard to see, avoid or predict: national grid electricity supply charges jumped 42% from December to January, but fell 61% from January to June.

Things aren’t all bad, though: Sure, gasoline cost 60% more on the first day of summer this year than last, but it was down 0.8% from the all-time high in the capital region a week earlier.

It should also be noted that the capital region starts from a baseline like one of the most expensive places in America to live. The Virginia-based Council for Community and Economic Research, or C2ER, produces a cost-of-living index that compares 262 metropolitan areas on measures such as housing, groceries and transportation. Albany-Schenectady-Troy was No. 52 on the overall composite index.

Finally, while consumer spending as a whole increases with inflation, not everyone can afford to grit their teeth and pay. Many Americans — the majority, by some estimates — cannot cover an unexpected $1,000 expense.

BIG AND SMALL

Discount retailer Ocean State Job Lot has been growing for years with its mix of discount and clearance merchandise. He says he’s seeing increased interest now, especially for food, daily necessities and summer seasonal items.

“The value we provide is always attractive to new and existing customers, and now more so than ever as everyone tries to stretch their budget,” said Paul Cox, director of store operations for the Rhode-based chain. Island.

Ocean State’s rewards program and its 50% Crazy Deal savings have been popular, he said. “With all the financial pressures our customers are under, we have seen an increase in the purchase of these offers.”

At the other end of the economic spectrum is Alpin Haus, a retailer of leisure and lifestyle equipment including boats, motorhomes and swimming pools.

Its business relies almost entirely on discretionary spending, which may tighten as the economy struggles.

“Overall, we’ve had a very good year,” said chairman Andy Heck. “Demand is not as strong this year as it has been for the past two years, but more in line with pre-pandemic.”

He sees fewer impulse purchases and fewer priceless customers, especially for large purchases that require financing, which is much more expensive lately.

There’s more interest in used boats and motorhomes, and Alpin Haus fears that ever-rising costs will put new units out of reach for many people.

But Heck says the market remains strong, even if the ability to buy into it falters.

“Americans want vacations, so there’s still pent-up demand for that,” he said.

Stewart’s Shops, the modern general store in many neighborhoods, pays more for everything—ground coffee, fuel to transport coffee to its stores, electricity to brew coffee, cups in which to sell coffee, salary of the cashier who calls him.

Stewart’s also charges more.

Everyone, spokeswoman Erica Komoroske said, is feeling the pain.

“Our coffee mugs have doubled in price, butter is up almost 40%, eggs are up, bacon is up, bread is up,” she said. “Costs have gone up on every product we sell and we’re doing our best to keep our prices low, but we have to pass some costs onto the customer. It’s really need, not greed. Our products continue to deliver great value for money as we are the town’s grocery store, restaurant and gas point in many areas.”

To ease the pain at checkout, Maine-based supermarket chain Hannaford continues to follow its everyday low price model, promotes its private label products as a cheaper alternative to national brands and targets members of its program. of rewards with personalized discount offers.

Spokeswoman Caitlin Cortelyou said Hannaford offers free online advice on how to shop on a budget.

“Customers have free access to virtual classes offering shopping tips and strategies for eating healthy on a budget, led by Hannaford dietitians,” she said.

KEEP IN MOTION

Niskayuna entrepreneur Aneesa Waheed has seen no pushback from customers at her Tara Kitchen restaurants as inflation places new demands on their budgets, and she is not worried she will if inflation continues.

“My whole thought process in everything I do is I try not to fight things that I can’t fight, I try to find solutions,” she said. “As a small business owner, everything that happens in the world immediately directly or indirectly affects the customer, ergo affects me.”

Tara Kitchen’s supply costs have skyrocketed, but it is a carefully managed operation and is trying to weather the storm without making many changes to customers, Waheed said.

It is moving forward despite the booming economy.

His first cookbook, which will attempt to demystify Moroccan cuisine on many levels, will be released on June 28, and a new restaurant in New York is set to open on November 1.

Because it’s an experience as much as a meal, dining out transcends inflation, Waheed firmly believes.

Curtis Lumber in Ballston operates in a sector that has been hit harder than most by the economic spasms of the past two years: building materials. Marketing director Jim Carpenter said his industry was still struggling with prices and shortages.

“We are seeing unprecedented increases from manufacturers. Over the past two years, lumber has been one of the most volatile items,” he said, adding that lumber prices have finally started to come down.

“That was a real positive,” he said. “All the other elements have gone up and continue to go up, unfortunately.”

Curtis has tried to cushion the blow to its customers by making deliveries with small trucks whenever possible or running its large trucks with fuller loads at more stops on fewer trips to save fuel. and labor costs.

He also buys in bulk—a full year of Trex composite decking, for example—so he can set prices for customers.

Leading indicators such as Google searches and webpage clicks suggest the home improvement frenzy of the past two years may be slowing, Carpenter said. Whether it was because of inflation or the fact that so many people who wanted the job done got it done, he doesn’t know.

There was a slight drop in price, with customers opting for a cheaper trim level or product line, but only a little. Typically, Carpenter said, if someone is able to get the labor for their project, they don’t skimp on the components.

“So we’re still seeing strong sales.”

As for the future?

History provides a clue: Eventually, all periods of high inflation moderated, but actual deflation was fairly rare in the US economy.

“We just had a good price increase just before the start of summer and there are rumors – more than rumors – there will be another in September,” said Crounse, owner of Glenville Beverage.

So, at some point, customers who now buy expensive beers may choose mainstream beers instead. But they haven’t done it yet, he says.

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Categories: Business, News, Schenectady, Schenectady County

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