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Price of Consumer Goods, Gas Continues to Rise
It seems like everything is getting more expensive. A gallon of milk, a piece of lumber, a new mattress -- all have gone up in price in recent weeks. Production has not kept up with demand for everyday items, such as gasoline and milk, and, as a result, theyâre becoming more expensive. Right now, the power to set prices for key commodities belongs to suppliers, said Anne Davis, director of the Bureau of Economic Research at Marist College in Poughkeepsie. "So the suppliers can say, âAha! I can charge whatever I want,'" Davis said.
Consumers feel powerless. Michelle Ross, a Middletown cashier, looks for sales to trim money from her shopping bills. "We only get a raise once a year," Ross said yesterday. "I just buy whatâs on sale." But for products like milk, shoppers have no choice. "You need it, so you buy it, whatever it is," Ross said. "What else can you do?"
Hereâs whatâs going on: - Gasoline: A year ago, gas cost $1.71 a gallon in the New York metro area, according to the Automobile Club of New York. A month ago, the price was at $1.93 a gallon. Now gas is at a record high of $2.13 a gallon in the New York area. Yesterday, prices for a gallon of gas ranged from $2.09 in Matamoras, Pa., to $2.17 in Liberty. "We do not have enough refinery capacity to keep up with the increased demand for gasoline," said Robert Sinclair, a spokesman with the Automobile Club of New York. If a refinery went down or a pipeline broke, like in Arizona last year, Sinclair said there would be even higher gasoline prices. "Forty percent of the American population lives paycheck to paycheck," Sinclair said. "It makes it very difficult on the average American who just does not have the elasticity in their budget to deal with these fluctuating gas prices."
- Dairy: The prices for milk, butter, cheese and ice cream have all been going up recently. The culprit: fewer milking cows. "Typically in the U.S., milk production increases about 1 [percent] to 2 percent per year," said Larry Salathe, senior economist with the U.S. Department of Agriculture. "Last year we had no increase in milk production." In fact, milk production in the first quarter was down 2 percent and is expected to stay down, Salathe said. So prices will likely stay up. Also, dairy farmers are getting more money for milk, causing store prices to go up, said Salathe. The USDA increased the wholesale level of milk 52 cents per gallon for May. At ShopRite on Dolson Avenue in Middletown yesterday, a gallon of whole milk cost $3.49. Thatâs up from a national average of $2.91 in April and well over the previous record of $3 in February and March 1999.
- Building materials: A hot housing market has caused prices of building materials such as lumber to go up 30 percent to 40 percent since the winter, said Monroe Levine of Fallsburg Lumber. Nationally, housing starts topped 2 million units in March, said Shawn Church, editor of Random Lengths, a newsletter publishing company in Oregon that tracks softwood lumber and panel markets. Thatâs up 15 percent from the March 2003 figure of 1.74 million housing starts. "This is as strong a home-building market as we have seen," Church said. "Especially when you consider that the houses built today generally are bigger than they were in past years." Softwood lumber prices are up 63.7 percent from $281 per 1,000 board feet a year ago to $460 per 1,000 board feet now, Church said. The price of plywood is up 123 percent from $264 per 1,000 square feet a year ago to $589 per 1,000 square feet now, Church said.
- Furniture: Steel prices are up 30 percent since January, according to Reuters. One of the main reasons behind the increase is that China, which is doing a lot of building to prepare for the 2008 Olympics, is demanding more steel. As a result, furniture prices are up. Don Urmston, owner of Furniture Options in Goshen, is paying 7 percent more for mattresses. He expects the price of recliners to also increase. "Towards the fall, prices would jump up probably in the range of 5 percent," Urmston said of recliners. "But whether the retail consumer will see that, I donât know." One of Urmstonâs suppliers recently notified him that for a number of reasons, including oil and steel prices increasing, the price of all furniture could go up as much as 34 percent this year. Kevin Jacobs, manager of Royal Furniture in Port Jervis, has seen prices for everything from sofas to chairs go up. The average mattress is up about $40, from $699 to $740, Jacobs said.
- Paper goods: This is a hike thatâs looming for consumers. Distributors are experiencing price hikes that will soon affect stores and eventually shoppersâ pocketbooks. The culprit here is higher prices for pulp and fuel. "Iâve seen a lot of increases in the past two, three weeks on almost all the products we buy," said Carl Morse, vice president of E.A. Morse & Co., a paper supply distributor in Middletown and Hudson. Last week alone, 25 different companies notified distributors like E.A. Morse that prices are going up, Morse said. Solo Cup Co. and Sweetheart Cup Co. increased prices of all paper products 8 percent on Sunday. Kimberly Clark raised prices 6 percent on certain products May 1. "The percentages of increase are from 3 percent and they go as high as 12 percent," Morse said. "We have to raise our prices."
Posted by: Mark Espinola 2004-05-20 |
