Inflation Leaves Consumers Eyeing Second Jobs, Cutting Back on Things They Love

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For Celia Mora of Durham, North Carolina, it’s the avocados. A bag of ten at Costco used to be $6.79. Now, it’s $11.30 — a 66% price increase. 

But it’s also the rent. The gas. The price of dog food. 

“At least in the last eight months, I have seen things slowly creeping up; it’s crazy,” she said. 

She’s not wrong. In the last year, consumer prices have jumped 8.5%, according to the latest Consumer Price Index: the sharpest year-over-year increase since 1981.

Some of the largest price surges were for gasoline, up 48% from March 2021; grocery store food prices, up 10% in the past year; and airline prices, up a whopping 10.7% in the last month alone.

Gas, Rent Prices Soar

Mora needs a car to drive between home and her two jobs. She used to give people rides freely. She’s now rethinking that since filling up her tank went from $48 to nearly $64.

“I’ve noticed in the east, the gas is cheaper. I try to really make my gas last until I get east, so I can pump gas at $3.53 rather than at $4.21.”

Meanwhile, with tech companies like Apple and Google moving into the area, the rents are rising too. 

According to the Department of Labor, the shelter index rose 5 percent over the last 12 months, its largest 12-month increase since May 1991.

“The cost of living here, I feel like I’m living in New York City,” Mora said. 

Tightening Budgets, Cutting Back on Luxuries

Consumers are also feeling the pinch in Pennsylvania. Carlos Reyes lives in Easton, where he’s been watching his and his wife’s weekly expenses go up and up. 

With the pair back to commuting five days per week to work again, their gas-related expenses have skyrocketed from $70 weekly for two cars to $115. 

Because of this, the couple has had to cut back on some of the things they enjoy doing.

“As somebody who loves to cook and derives pleasure from physically going to grocery stores, I’ve seen those habits change the most,” Reyes said. 

“During the week, I would frequent my local Lidl (a discount store similar to Aldi) for odds and ends or ingredients for a specific recipe. I now find myself at Costco more often and try to buy in bulk.”

Even second-hand items aren’t immune from the price hikes. Reyes is an avid thrifter and said he’d seen prices go up “exponentially” in thrift stores. 

“Some thrift stores are now paying upwards of $15 an hour to attract employees and are often so short-staffed that they only accept donations on the weekend.”

Eyeing a Second Job

Meanwhile, in Brooklyn, 23-year-old Annalisa Myer, a graduate student, is currently looking for a second job just so she can cover her basic expenses over the summer. 

She gets a stipend, but with prices rising, she’s found herself in a “pile of debt” that has been accumulating over the last few months. 

“I went to the grocery store last night and was like damn, when did food get so expensive? I literally had $20 to spend on food for the week.” 

Myer said her only real luxury expenses now are her gym membership and Hulu account. 

“Once I secure a job, I’m going to focus on budgeting, cutting out unnecessary purchases, saving, and hopefully, paying off my credit card debt.” 

The Makings of Inflation

Inflation is a response to supply and demand changes. When demand is high but supply is low anywhere in a supply chain, then prices go up. 

During the pandemic, there was a huge amount of federal and state government stimulus money given out to help consumers and businesses recover, Sam Dogan of Financial Samurai explained. 

The more money given freely to consumers, the more money tends to be spent on goods and services.

“The more money that gets spent on goods and services, the higher prices go given the rise in demand,” Dogan said. 

Meanwhile, there’s been a pent-up demand for goods and services. 

During 2020 and parts of 2021, many consumers also saved more due to the unknown. “The national saving rate surged to 31% in April 2020,” Dogan said. 

But as consumers gained more confidence and the pandemic subsided, the savings rate went back to the mid-single digits. In other words, more people are spending their savings, creating more demand for the limited supply, Dogan said. 

Finally, because of shipping and production delays due to the pandemic and increasing global conflict, it’s been difficult for manufacturers and producers of pretty much everything to get supplies, Financial Freedom author Grant Sabatier said. 

“This means the cost of pretty much everything has increased and that cost gets passed onto you, the consumer.”

Inflation Expected to Peak by End of 2022

However, there are good indications that inflation will peak by the end of 2022, the experts said. 

“Supply chains are improving, rising interest rates are moderating demand, as are higher prices,” Dogan said. 

Consumers like Reyes, Mora and Myer are doing the right thing by trying to keep spending down now while prices are high, Sabatier said. 

He added that it’s also worth asking for a raise. The labor market is also in short supply, so employers may be willing to pay you more to keep you on rather than lose money finding a replacement. 

“Unfortunately, inflation has increased faster than salaries at most jobs can keep up, but since the demand for workers in most industries is so high, I predict that salaries will catch up over the next year in most industries,” Sabatier said.

“For now, it’s best to save as much money as you can by putting off large purchases until prices come down in the future. Keep your expenses as low as possible until both inflation comes down and salaries start going up faster.”

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