Inflation 2021: Why food, gas prices are rising | Apps to help you find the best deals

ByJason Knowles and Ann Pistone WLS logo

Friday, July 23, 2021

Why prices are rising on everything from food to gas

The prices of food, appliances, cars and gasoline are on the rise - and the pandemic is not the only reason.

CHICAGO (WLS) -- What's causing rising prices in 2021? Consumer goods increased more than 5% from last year.

The prices of food, appliances, cars and gasoline are on the rise - and the pandemic is not the only reason. Demand for those goods picked up, as the country opened up and businesses are now having trouble keeping up.

The climate played a role in driving up food products' prices.

"Out west is literally on fire and they're facing a huge drought. So a lot of agricultural products, whether it be blueberries or strawberries, prices just going up there just because of a lack of supply," said Sean Coary, assistant professor of marketing at Loyola's Quinlan School of Business. "Also Brazil is having the largest drought that has had in over a century, causing an increase in prices of soy, corn, and also, coffee."

That drives up food prices at the grocery store and when you're dining out.

"Restaurants are really facing kind of a double-whammy right now with food prices, raw material costs are going up, as well as wages are going up, and since restaurants were forced to shut down and maybe only do takeout, they really struggled last year, so their first instinct is to pass that cost onto the consumers," Coary added.

Restaurants and other industries are also paying higher wages to attract workers. A survey conducted earlier this month by Challenger found 95% of companies are currently hiring and 85% are experiencing a labor shortage. Many in the service industry switching careers after closures and restrictions during the pandemic. Higher wages are often passed on to consumers.

Oil production was cut due to low demand during the pandemic which caused prices to surge 45% from last year, and COVID-19 caused supply chain problems which hit the auto industry.

"There is a shortage of semiconductors that go into new cars, so new car production and sales are down. So people aren't trading in their used cars. So people who want to buy a used car find it hard to get one," said Thomas Mondschean, economics professor at DePaul's Driehaus College of Business.

Experts tell the I-Team that there may be price relief for products that have recently seen big increases, as early at the first quarter next year, including gasoline.

"More countries are getting vaccinated, so more countries are going back to economic recoveries," added Mondschean. "So It will take a while for supply and demand to get back into alignment, but it will happen."

Some experts think inflation will continue, but not at the same rate we are currently seeing.

In the meantime, there are apps that can help you find cheap gas prices in your area and to save on food. Don't forget to utilize coupons and make a list of what you want at the grocery store before you go in.