Which Higher Prices Are Here to Stay?
Prices are surging for many household expenses as the pandemic eases and the economy reopens
Inflation is heating up across the economy as the ebbing of the pandemic unleashes pent-up consumer demand at a time of supply shortages. Overall consumer prices jumped 5% in May from a year earlier—the biggest increase since 2008, the Labor Department reported Thursday.
Some of these increases—such as for airfares, restaurants and women’s suits—reflect a return to normal, or pre-pandemic price levels, after prices collapsed last year due to business closures and restrictions and consumers’ fear of traveling and getting infected. Some—such as car and truck prices—are due to shortages of specific components or materials. Such jumps are likely to prove temporary and unlikely to lead to persistent increases for years to come.
Other price rises, however, could reflect more lasting changes in workers’ and consumers’ behavior over the past year. Here are some examples of May price increases hitting consumer pocketbooks directly:
Returning to Normal
Restaurants: Prices for meals at full-service establishments rose 0.6% in May from the month before, and were up 4% from a year earlier. Meanwhile, grocery prices are rising more slowly this year than during 2020, when people shifted to eating more at home.
Price pressures may continue to build in coming months as people venture out more. The average number of seated diners tracked on the restaurant reservation platform OpenTable was down in the first week of June just 9% from 2019 levels. That is better than the figures for the first week of May, when they were down 21% from two years earlier.