Business

/

ArcaMax

Susan Tompor: Consumer prices up 7.5% in the Midwest over the past year; faster than nation

Susan Tompor, Detroit Free Press on

Published in Business News

GasBuddy expects the yearly national average gas price to hit $3.41 a gallon in 2022, up from $3.02 for 2021.

"After a hot start to the summer, prices should begin to decline, falling back to potentially just under $3 per gallon by the holiday season," according to the GasBuddy outlook.

The average household is expected to see its gasoline spending hit $2,341 for the year, the highest since 2014.

Another big mover in the Midwest: the cost of natural gas.

The Midwest saw an uptick of 33.7% for natural gas prices in the past year through December — significantly more than the 19.3% gain in the South and the 21% gain in the Northeast.

How upset you are about price hikes, though, could depend a great deal on your own financial situation.

Right now, the consumers who are being hit the hardest continue to be those making close to the minimum wage who do not have much in savings to cushion the blow of higher expenses.

Many families benefited from one stimulus payment in 2021 and six advance monthly payments from July through December for the child tax credit. The extra cash eased some of the pain of higher prices. But no similar payments are currently in the works for 2022.

If inflation continues to heat up, we're going to hear more grumbling from many middle income and higher income households.

Where are signs of hope?

Charles Ballard, professor of economics at Michigan State University, suggested that one might spot a hopeful sign if you look at the monthly changes for prices, instead of the year-over-year changes.

 

The big headline is the 7% CPI change year over year nationwide.

But Ballard pointed out that the month-to-month change from November to December was 0.5%, which was less than the type of shifts we saw in October (up 0.9%) and November (up 0.8%).

It's hard to build a forecast on a month or two of data. But it's also hopeful that gas prices have been trending down in the last month, he said.

"If energy prices stabilize, that will go a long way toward moderating the overall rate of inflation," Ballard said.

Yet he warned that inflation will continue to be part of the picture in 2022.

"Even if the overall rate of inflation moderates in the coming months, the year-over-year rate of inflation will almost certainly stay high," he said.

When it comes to the Midwest, it is important to note that the CPI measures the direction of prices, not whether people who live in the region actually pay more for things like food, rent and transportation than they do in another part of the country.

The Midwest region is composed of Michigan, Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.

In general, the Midwest consumers have tended to benefit from a lower cost of living. Some businesses even may have more wiggle room to pass along their higher costs in the form of price hikes here — up to a point.

Right now, though, many consumers in the Midwest can only hope that we don't turn into the leader for price hikes in 2022.

©2022 Detroit Free Press. Distributed by Tribune Content Agency, LLC.