Inflation Impact Study

Inflation has been easing and is nearly back to normal. Yet, Americans’ perceptions of inflation have not really shifted. There’s a lingering view that prices are still out of control. Why is this? Well, first, inflation is cumulative. Even if prices today are rising moderately, they come off very strong increases. In that context, lower inflation means little. Take chicken as an example. So far this year, chicken prices in grocery stores are up by about 0.9% on an annual basis. Not too bad! But that 0.9% increase follows a 28.9% increase from 2019 to 2023. So, the cumulative increase is more like 29.5%. This brings us onto the second point of consumer psychology. Most people, in their heads, hold at least a vague sense of what things should cost. This, as the New York Times recently explained (link to article in comments), is known as the reference price. Today there is a humungous gap between reference prices and actual prices. Most consumers are still living in the price world of 2018 or 2019. That’s not really surprising as pre-pandemic, inflation was incredibly stable and created an embedded sense of what things should cost. Over the summer we asked consumers on our panel what they thought things should cost across various categories and compared it to actual average costs. In grocery, people think prices should be 28.5% lower than they are. In household care products, the gap is 25.3%. The gap is largest in essential products. There's higher inflation here to start. But because these are more frequent purchases people notice price changes and have a better understanding of what prices used to be. They’re also, very often, necessity buys rather than enjoyable discretionary purchases, so there’s likely more resentment of higher prices. Interestingly, in gasoline, perceptions of what prices should be run lower than the actual inflation rate. This is likely because gas prices have always jumped around, so reference prices are all over the place. The key thing here is that there is a divorce between actual data and how people feel. It is taking some time for people to psychologically adjust to inflation. #retail #retailnews #inflation #prices #economy #consumers

There is stark divide is emerging in the US with the most vulnerable is society bearing the heaviest burden of inflation. Consumer prices have soared in the past year in the US, with essentials like food and gasoline rising even higher. For lower-income families, inflation represents an erosion of their already tenuous financial stability. The US Federal Reserve, in its attempts to balance inflation control and growth, must not lose sight of those most affected. Policymakers must recognise that addressing inflation is about preserving the dignity and well-being of millions of Americans. If that is what price stability is supposed to deliver, then it is desperately needed. This moment demands a reevaluation of our social contract. Expanding safety nets, providing targeted assistance and addressing economic inequality are not just moral imperatives but economic necessities. The strength of the US economy rests not on the prosperity of the few, but on the security afforded to all. Source: Apollo (https://lnkd.in/dtwA22gE)

The Affordability Crisis Is an Inequality Crisis When prices spike in key sectors like energy, food, and housing, it's not just inflation—it's a massive redistribution shock that hits low-income households hardest. In our new working paper, my co-authors and I identify which sectors matter most for both inflation and inequality. Here are the key findings: The Problem with Standard Inflation Analysis Traditional approaches reduce inflation to a single aggregate index. This conceals two critical facts: inflation is often triggered by sector-specific price shocks, and consumption baskets differ systematically across income groups. The result? Unequal inflation burdens that worsen income inequality. Our Approach We extended the input-output price model to trace how price shocks propagate through production networks while accounting for how different income groups spend their money. By introducing decile-specific consumption baskets, we can simulate how each sectoral shock affects living costs across the income distribution and map these effects to changes in the Gini coefficient. What We Found The capacity to increase inequality is highly concentrated in a small set of "systemically significant sectors for inequality" (SSS-I): - Energy (oil, gas, petroleum & coal products) - Food and agriculture - Chemicals - Housing - Wholesale trade - Healthcare Consumption heterogeneity is critical: a shock to food generates inflation 126% higher for the poorest households than the richest. For petroleum and coal products, it's 54% higher for the poorest decile. The 2021-2022 Case The joint shock to the eight SSS-I sectors during this period raised the Gini coefficient by 0.0023—approximately one full year of the average annual increase in inequality observed during 1980-2021. Petroleum and coal shocks alone accounted for roughly one-third of a typical year's inequality increase, while food and agriculture shocks each represented about two-thirds. Policy Implications These findings challenge conventional monetary policy responses. Interest rate hikes do little to lower the price of oil or food, yet they raise debt costs and weaken labor markets—amplifying inequality rather than alleviating it. Using blunt monetary tightening against supply shocks is both inefficient and regressive. Macroeconomic stability and income distribution stability are deeply intertwined. A Better Path Forward We need a policy toolkit that includes strategic reserves, supply chain resilience, and sector-specific price instruments. These approaches can contain inflation in systemically significant sectors without worsening inequality.

Inconsistent Policies Fuel Market Disruptions in the Pulses Sector!! Inconsistent government policies in the pulses sector have led to severe market disruptions, fostering speculation, cartels, market manipulation, and diversion of subsidized materials meant for government schemes to open markets. This has distorted the pricing and availability of essential commodities for the general public. In January, it was evident that India would face an acute shortage of pigeon peas and chickpeas, along with some shortages of black matape. However, instead of consistent and predictable policies to address these shortages, the government has engaged in on-and-off policy maneuvers. Trade restrictions, such as stock limits and extensions of duty-free imports of yellow peas, have been implemented with short-term positive impacts on the market. But these knee-jerk reactions have caused long-term damage to the overall pulses trade, exacerbating price volatility and uncertainty. The pulses inflation has remained consistently in double digits. Pigeon peas, in particular, saw prices surge to last year's high of ₹130,000 per ton in June, despite the demand being at its lowest point. Speculators took advantage of the situation, driving prices up only to short them later. A similar pattern was seen with black matape, where prices spiked to over ₹110,000 per ton before dropping below ₹90,000. Now, the bulls are back in the pigeon peas market, and prices are recovering on a near-daily basis. Chickpeas followed a similar trajectory, with prices slowly inching up until June when they started moving up steeply from around ₹60,000. Given the current scenario, it's clear that prices are being manipulated by vested interests. There is no justifiable reason for pigeon peas to have reached ₹130,000 in June or chickpeas to be trading at ₹80,000 per ton now. With the festive season approaching and limited availability of pigeon peas and chickpeas in the market, prices are expected to surge further over the next couple of months. The only potential respite lies in the East African crop reaching India quickly, but even that faces challenges due to Mozambique's issues and Tanzania's new auction-based procurement system, which could delay shipments. Freight costs are also rising, and port congestion in East Africa may further complicate the situation. To prevent such manipulation in the future, it is crucial that government policies remain consistent and transparent for a certain period. Policies should not act as shocks but be driven by clear indications. Furthermore, it is essential that the government's interventions in the open market, such as OMSS or retail-side interventions like Bharat Dal and other pro-poor distribution schemes, are managed well to avoid leakages. Consistent and transparent policies, combined with well-managed interventions, are the need of the hour to stabilize the pulses market and protect consumers from price manipulation and supply disruptions.

April's CPI report has a lot to unpack beyond higher gas prices. Food prices rose 0.5% over the month, with five of the six grocery store food groups increasing, driving the food at home index up 0.7%. Tomatoes posted another sharp jump, driven by a mix of weather/supply issues, tariffs, and now higher diesel costs. Beef prices continued climbing on the back of tight supply and strong demand. Eggs (not shown in the chart) are nearly 40% cheaper than a year ago following last spring's avian flu peak. A pattern worth watching is starting to take shape. The biggest movers from March to April were perishable food items and categories with higher energy exposure. The full impacts of the Iran war won't show up in grocery prices for several more months, but the canaries are beginning to signal that cost pressures are building. #FoodEconomics #FoodPrices #FoodInflation #Inflation #CPI

The CPI can tell you what’s happening on average. But it can’t tell you what it feels like to buy groceries in Greensboro, grab lunch in Austin, or stock up on essentials in Memphis. That’s the gap we’re trying to fill with DoorDash’s latest State of Local Commerce update — our first quarterly look at how prices are actually moving across cities, categories, and everyday purchases. A few things that stood out to me: 1. The grocery story is improving. Our Breakfast Basics Index — the price of three eggs, a glass of milk, a bagel, and an avocado — is down more than 22% year-over-year as of March 2026, largely due to egg prices normalizing after last year’s spike. But whether you're in Greensboro, NC or Gilbert, AZ can be a significantly different price at checkout. 2. Restaurant prices are stabilizing Restaurant price growth overall is in a similar range (+3.2% year-over-year), suggesting a more moderate, steady trend. That tracks slightly below the latest food-away-from-home CPI released earlier today (3.8% year-over-year). 3. Everyday essentials are… essentially flat. The items people buy every week — diapers, detergent, toothpaste — are down slightly (-0.3% year-over-year). Not dramatic, but important: it means one part of the household budget isn’t getting squeezed further. 4. There is no single “economy” right now. There are thousands of local ones. A cheeseburger meal costs $12.47 in Lincoln, NE. Breakfast basics are cheapest in places like Greensboro, NC ($2.60). Everyday essentials are most affordable in Memphis, TN ($51.93). Where you live still shapes what you pay, by a lot. This is why local data matters and why we're committed to routinely sharing what we see across the DoorDash platform as part of our State of Local Commerce. Check out the data for yourself:  https://lnkd.in/eNyB-xPt

Food Insecurity in an Era of Economic Trade-offs The recent surge in food insecurity among working Americans highlights a troubling paradox: even in a period of low unemployment and economic growth, many families are struggling to meet basic needs. Food banks across the country report increasing demand, not just from traditionally underserved populations but also from middle-income households, many earning $100,000 or more annually. This shift signals that inflation, particularly in essential goods like groceries, has outpaced wage growth for many, eroding purchasing power and forcing difficult trade-offs in household budgets. This trend reflects broader economic challenges, as policymakers weigh the trade-offs between controlling inflation and supporting wage growth. Inflation, which surged during the pandemic recovery, has left a lasting mark, even as price increases have moderated. For many families, the cumulative effect of a 23% rise in prices over the past five years means that even modest inflation feels unsustainable. When grocery prices have risen nearly 28% in the same timeframe, the impact becomes even more pronounced. Families with stable employment are finding themselves in situations where food assistance is necessary simply to make ends meet. This growing reliance on food banks is not only a marker of economic strain but also a reflection of systemic changes in how inflation reshapes household priorities. Many families are forced to make difficult choices, redirecting funds from other essential needs like clothing and transportation just to put food on the table. I am honored to work with Feeding San Diego, a vital organization addressing food insecurity in our community and reminding us of the deeply human side of these challenges. The strain is palpable in food banks across the nation, many of which have seen record-breaking demand and are struggling to keep up with rising needs despite limited resources. At the same time, we’re seeing a bifurcation in consumer behavior. While many are relying on food banks and cutting back on discretionary spending, others are continuing to purchase premium goods at upscale retailers. This divide underscores the uneven impact of economic pressures and the importance of tailoring business strategies to a fragmented consumer base. Companies catering to the premium segment are experiencing growth, while businesses that traditionally serve middle- and lower-income families are grappling with how to meet consumers where they are without sacrificing profitability. For businesses, understanding these dynamics is critical. As consumer behavior shifts in response to economic pressures, companies must navigate a delicate balance: delivering value to cost-conscious shoppers while innovating for segments that remain willing to spend. #FoodInsecurity #EconomicTrends #BehavioralEconomics

The return of $100 oil for the first time since 2022 risks adding fresh pressure to household finances, with the cost of living still the dominant concern for UK consumers. I spoke with This Is Money’s Jane Denton about how the latest Middle East conflict could filter through to rising essential costs and UK grocery prices. Grocery spending is a central and highly visible component of household budgets, where energy shocks across gas and oil often find their way into the food system. ➡️      The most immediate pressure comes from oil itself. Higher crude prices increase transportation, refrigeration and logistics costs across the food supply chain, while disruption to key shipping routes is extending transit times and raising freight costs. ➡️      The Middle East also plays a key role in broader global energy, lifting natural gas prices – a critical input for fertiliser production. Fertiliser production is highly energy-intensive, particularly nitrogen fertilisers which rely heavily on natural gas as both a feedstock and power source. When energy prices rise sharply, fertiliser costs typically follow. ➡️      For UK farmers, fertiliser is one of the largest input costs in modern agriculture. Sustained increases squeeze margins, encourage lower application rates and can reduce crop yields. Over time, these higher production costs feed into agricultural commodity prices and eventually grocery supply chains. There are some buffers in the short term. UK food supply chains rarely operate on spot pricing and a large share of imports come from European markets rather than routes through the Gulf. The risk isn’t an immediate spike at the checkout, but a slow burn within the agricultural supply chain that could nudge food inflation higher later in the year if energy markets remain volatile. The broader concern is confidence. Inflation had been easing and pressure on household finances was starting to moderate. A renewed energy shock could stall progress and weigh on both business and consumer sentiment. ____________________________________ ⤴ Follow me for weekly retail, consumer and economic insights. ____________________________________

Electricity prices aren’t rising for the same reasons everywhere (nor are they rising everywhere). As part of LBNL’s recent work, we explored what’s driving prices across the U.S. Our six case studies show just how diverse the drivers can be: ⚡Florida: Storm recovery and grid hardening pushed nominal prices up, while natural gas volatility added price variability 🔥California: Wildfire mitigation and liability costs, distribution upgrades, and net metering all contributed to higher prices in 2024 vs. 2019 ❄️Maine: Storm recovery, net billing, RPS requirements, and distribution costs drove recent increases; natural gas price fluctuations caused tremendous price variability 🌱Virginia: RPS requirements and gas costs pushed prices up, but demand growth helped offset some of those increases through 2024 📈North Dakota: A case where load growth + abundant energy = lower prices ⬆️Mid-Atlantic: PJM capacity prices caused significant recent price spikes in 2025 IMPORTANT: Price increases hurt the pocketbook but ideally offer longer-term value. I doubt anyone would argue that we should leave millions of households without power after a major hurricane because rebuilding will increase prices. Balancing price increases with value received is one of the most important tasks of policymaker and regulators.   A slide on the Florida case is shown below; for all six, see the PPTs at this link: https://lnkd.in/g6xN7EYT #ElectricityMarkets #EnergyPolicy #GridModernization #ElectricityPrices #RenewableEnergy #PowerSector #EnergyInsights

I came across a post today about the potential price increases in Kenya on essentials like sanitary towels, diapers, and detergents linked to new waste management rules. It stayed with me, not because environmental regulation is wrong, but because transitions can land unevenly. On paper, stronger waste rules are a good thing. We need producer responsibility, cleaner systems, and less pollution. But in real life, when the cost shows up fastest in hygiene products, the conversation quickly becomes bigger than waste. Sanitary towels are not a “consumer preference.” They are a basic health and dignity need, and in practice they sit squarely within #SRHR. When access becomes harder, it can affect school attendance, confidence, and health; especially for girls in households already stretched to the edge. That’s not drama. That’s how poverty works: small price shifts create big consequences. So the question for me is not whether regulation should happen. It’s whether we are designing development-sensitive regulation, where environmental ambition is matched with social protection, market shaping, and practical implementation. If we want sustainability that lasts, we have to hold two truths at once: We must fix waste, and we must not make dignity unaffordable. This is where policy makers, producers, counties, schools, health actors, and financiers should be thinking together: 🔹Are there phased timelines for essentials? 🔹Can EPR costs be structured in a way that doesn’t punish low-income consumers? 🔹What cushioning measures exist; targeted support, school-based access, tax reliefs, innovation incentives, or procurement programmes, to protect the most vulnerable while the system adjusts? Sustainable progress depends on getting both the environmental intent and the social outcomes right. Impact Africa Consulting Limited #SustainableTransitions #PolicyInPractice #InclusiveDevelopment #EnvironmentalRegulation #PublicHealth #GenderEquity