4 Surprising Items With Big Price Increases in the Past 5 Years
Written by
Terence Loose
Edited by
Rebekah Evans
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You might have noticed that prices have been rising in recent years. And while some goods, like food and gasoline, might not surprise you since most people buy these items weekly, others can be shocking when you learn just how much they’ve risen over the past five years.
First, the good news. According to Stephen Kates, certified financial planner (CFP) and principal financial analyst for RetireGuide.com, inflation will not return to its peak levels and likely remain between 2% and 3% for years. “The Fed appears likely to lower interest rates throughout the next year, which will have the potential to maintain the pace of consumer spending and, therefore, price inflation at its current level,” he said. That number, as of September, was an annual rate of 2.4%, according to the U.S. Bureau of Labor Statistics.
Now for some not-so-great news. Some very common categories of goods and services have risen by shocking amounts over the past five years.
Here are four of the big ones.
Auto Repair
- 5-year change: +51.6%
Here’s an inflationary area that might surprise you, especially with its outsized number. One reason is you don’t see your auto mechanic all that often, hopefully. But if you did notice, Kates said there are a few things going on here. One is simply that “employee wages rose significantly during the pandemic, impacting industries everywhere,” he said.
But another reason is technology. In some technological areas, like computers and televisions, prices have actually dropped. But, Kates said, in auto repair, tech actually increased prices. “Trades like auto mechanics are vital and they need ever-more technical skills to deal with the more technologically complex cars and trucks,” he said. More skill equals higher wages.
Auto Insurance
- 5-year change: +51.2%
Right about now public transportation is probably looking a lot better. Yes, that car or truck is costing a lot more than it did in 2019. Part of it is the creeping inflated cost of your auto insurance. But why? “Insurance rates are playing catch-up after the pandemic, when many states didn’t allow insurers to raise their premiums,” Kates said.
He said this goes for home insurance as well, which rose 34% nationwide over the last seven years, according to the Federal Reserve Bank of Minneapolis. “Higher home and auto prices translate to higher insured amounts. Higher material and repair costs increase insurer costs, which are passed on to consumers,” Kates said. “Storms and poorer driving post-pandemic also contribute to higher insurance costs.”
Housing
- 5-year change: +29.3%
Housing, most people’s biggest monthly expense, has had a surprising boom over the last five years. But it’s not merely the normal, expected appreciation of real estate. “Historically low levels of supply have naturally pushed prices up,” Kates said. “We have had chronic under-building on new homes since 2008, which has compounded over the years.”
In addition, he said, the work-from-home trend that the pandemic fueled and expedited, added to the problem, especially in certain areas and with specific types of homes. “Certain types of housing are highly in demand, such as sun-belt cities and homes with multiple bedrooms and offices, which facilitate work from home,” Kates said. To slow the housing price inflation Kates said we will need aggressive building.
Restaurant Menu Prices
- 5-year change: +27.2%
If you’ve gone out to eat lately, you might have suffered some sticker shock when the bill arrived. But in actuality, this number isn’t that surprising once you look under the hood. According to the National Restaurant Association (NRA), based on U.S. Bureau of Labor Statistics data, the average total expenses for running a restaurant has risen by 26.2% since 2019. This includes food costs (+29%), labor costs (+31%), utility costs (+16%), occupancy costs (+12%) and other costs (20%).
And don’t expect these costs or menu prices to reverse, said Robert Persichitte, certified public accountant (CPA), certified fraud examiner (CFE), CFP, Delagify Financial investment advisor and director of the Volunteer Income Tax Assistance Program at the Metropolitan State University of Denver.
“That’s not how inflation is measured,” he said. “We wouldn’t expect businesses to leave money on the table voluntarily. Lower inflation doesn’t mean lower prices, it means prices that aren’t constantly rising.” Hence, the NRA reported that to maintain a 5% margin, restaurants needed to increase their prices by 26.2%. Any less and they risked losing money.
What Does This Mean for the Future?
You might be asking what comes next. Will high inflation return? And what can the government do to slow it? As usual, it’s a bit tricky to tell, especially when the race for the White House is both near an end and still too close to call. But, Cliff Ambrose, federal retirement consultant (FRC), client accounting services (CAS) and founder and CEO of Apex Wealth, said, “Ongoing issues like labor shortages, rising energy costs and supply chain problems could cause inflation to flare up again.”
Emphasis on could, because there have been successful measures to lower inflation. “The Fed has been aggressive with interest rate hikes to curb inflation and while it’s helped, the effectiveness depends on the economy’s broader trajectory,” he said. “Moving forward, the next administration could play a role in tackling inflation by implementing policies that focus on improving supply chain resilience or increasing affordable housing supply.”
As for what you can do? “To cope with rising prices, consumers can focus on budgeting carefully, cutting unnecessary expenses and exploring alternatives for high-cost items, like shopping around for better auto insurance or repairing instead of replacing,” he said.
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