The rising cost of everything was the financial story of 2021 — and it seemed that inflation showed up on price tags everywhere that shoppers went to trade money for stuff. But the economy doesn’t follow a calendar, and just because it’s a new year, there’s no reason to think that prices will suddenly fall back down to earth.
In fact, Fannie Mae predicts that inflation will hit 7% in the first quarter of 2022 before decelerating back to 3.8%. For context, the 6.8% spike in the November 2021 Consumer Price Index (CPI) represented the highest rate of inflation in nearly 40 years.
In short, prices will keep rising in 2022, by more at first, then by less — but not all goods and services will get more expensive at the same pace.
In the last days of 2021, GasBuddy released its annual forecast for the coming year. While many experts have predicted that gas prices might fall later in the year, it will almost certainly get worse before it gets better. The GasBuddy study predicted an overall increase of 40 cents per gallon for an average of $3.41 in 2022, but prices could top $4 in the spring before drivers get any relief.
Much has been written about the global chip shortage and its impact on the new and used car industries — but there’s been less fanfare about the rising cost of motorcycles, which have been facing the same inflationary pressures all along. In late October 2021, Harley-Davidson announced a worldwide surcharge on its motorcycles and increased its existing U.S. surcharge from 1.2% to 3.5%, according to The Times Bureau.
Unlike their motorized cousins, bikes don’t require microchips, but inflation continues to drag the cost of bicycles up right along with motorcycles. Bikes were one of the original pandemic boom items of 2020, according to Bloomberg, which caused supply to fall and prices to rise from the outset. Then, the bike industry was hobbled by the same supply chain issues that struck every other segment of the economy just as demand began rising again in 2021. Reduced selection and high prices have been the theme of the industry all winter long, and there’s no sign that the first half of the year will be any better.
The National Association of Realtors (NAR) cited more than 20 top economic and housing experts who predict that interest rates will rise in 2022. The consensus opinion is that the Fed will hike interest rates twice later in the year by a quarter-point each time. When that happens, car loans, home loans, and borrowing, in general, will cost more.
The same NAR report that predicted rising interest rates also predicts that home prices will keep going up throughout 2022, although not by as much as last year. Home values soared by nearly 20% in the wild year of the 2021 housing market. Although that kind of growth isn’t sustainable, houses will probably continue to get more expensive. The NAR expects home prices to rise by 5.7% in 2022.
According to the Central Valley Business Journal, the price of fast food rose by 10% since the start of the pandemic. In 2021, many of the biggest names in the drive-thru game announced price hikes that customers will feel in 2022, including Little Caesars, Dunkin’, McDonald’s, and Taco Bell.
It’s not just Big Macs and chalupas. The overall rising cost of food and supply chain issues will make it more expensive to eat out across the board in 2022. The National Restaurant Association reported in October that about nine out of 10 restaurants in the following segments were experiencing costly delays that will inevitably be passed on to the consumer: family dining, casual dining, fine dining, quick service, fast-casual, and coffee and snack.
From upholstery and cotton to wood and thread, furniture manufacturers had trouble getting enough of the supplies that they needed on the schedules that they needed them all year long. The results will be evident on price tags across the industry in 2022. In November, Ikea — the biggest furniture brand in the world — announced average prices increases of 9%.
Items at Dollar Stores
In November, CNBC reported that Dollar Tree was abandoning the most important part of its name when it announced that it was bumping up the base price of most of its products from $1 to $1.25. The new prices will be rolled out throughout the first quarter of the year.
Although prices steadily rise over time, some products defy inflation as their prices go down as the years drag on. None more so than TVs, which have decreased in price by 97% since 2000, according to The National Interest. But not lately. By October 2021, inflation had hit the TV industry so hard that the cost of a new television had risen to the highest level since 2012 and continues to tick up today.
On Jan. 3, the very first weekday of the new year, President Biden announced a $1 billion plan to curtail the soaring cost of meat by stoking competition in an industry where just four companies control 85% of processing, according to USA Today. The cost of meats, poultry, fish, and eggs climbed by 12.8% over the last year — more than any other category on the CPI, according to Forbes — forcing shoppers to dig deeper for all kinds of meat in 2022.
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Jordan Rosenfeld contributed to the reporting for this article.