Consider This from NPR - Inflation Is Still High. Why That Hits Low-Income Americans Hardest.

Episode Date: May 12, 2022

Inflation dipped slightly in April, but it's still at a historically-high 8.3 percent. Research suggests lower-income families suffer the most when prices rise.NPR's Scott Horsley explains how people around the country are coping with inflation, and what the Federal Reserve is doing to try to bring it under control.This episode also includes reporting from NPR's Jennifer Ludden, on eviction rates rising in the face of increased rent and the end of pandemic rent aid in some places.And it features reporting from NPR's Brittany Cronin, on what's driving rising fuel prices.In participating regions, you'll also hear a local news segment to help you make sense of what's going on in your community.Email us at [e-mail] more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This message comes from Indiana University. Indiana University performs breakthrough research every year, making discoveries that improve human health, combat climate change, and move society forward. More at iu.edu slash forward. Here's a not-so-theoretical question. What do you do when the same things cost more? Sure, you can look for budget trims, cut back on eating out, maybe turn that planned road trip into a staycation. But the thing is, the costs that are dominating headlines right now, the ones keeping inflation at a painful 8.3% in April,

those costs aren't really negotiable. Another day, another record high for gas prices. The upward trend has drivers making some serious adjustments to their budget. Even at $4.42 a gallon, you might still have to fill up your car to get to work. Many areas of the economy are being impacted by inflation, including items you put in your grocery cart. Grocery prices may be up nearly 11 percent%, but you have to eat. And as high as rent goes... Prices have been rising throughout the pandemic, and it doesn't look like they'll be changing anytime soon.

You still need a roof over your head. And all of those ballooning prices, the ones you can't cut out of your budget, in all kinds of ways, they hit people with low incomes the hardest. Let's look a little closer at housing. In April's inflation report, housing costs are up 5.1% from a year ago. And at the same time that rents are rising, the pandemic rental aid designed to keep people in their homes, it's running out in some places. It's kind of amazing that all this has happened right around the same time and it's a real tenuous situation for both providers and developers and residents. That's Greg Brown of the National Apartment Association, which represents landlords. He says the housing market is so tight, occupancy rates nationally have hit a record 97%.

Higher than that in some markets. I actually have a member who told me two weeks ago that they have 8,000 units and they have eight vacancies out of 8,000. The consequence of all that, eviction rates in many parts of the country are soaring. Donna Carney is with Lone Star Legal Aid in Houston, a city where rent has risen 11% in the last year, according to the latest numbers from Redfin. Our tenants are having to decide between buying food for their children or their elderly parents or paying rent. And that's a real tight squeeze. Consider this. Inflation is still extraordinarily high, and the people paying the steepest price are those who can least afford it.

From NPR, I'm Mary Louise Kelly. It's Thursday, May 12th. This message comes from WISE, the app for doing things in other currencies. Send, spend, or receive money internationally, and always get the real-time mid-market exchange rate with no hidden fees. Download the Wise app today, or visit wise.com. T's and C's apply. It's Consider This from NPR. So, how bad is the latest inflation report? Well, it was down slightly from a four-decade high of 8.5% in March, but only slightly to 8.3%. And there was some bad news hidden in that number.

The drop was thanks largely to a dip in fuel prices in April. But go to a gas station this month, and you can expect to hear comments like this from Siren Henderson in Harlem. Gas prices are ridiculous. That's because prices are up since April to $4.42 a gallon nationally, according to AAA. We're blaming it on Ukraine, but we're trying to survive out here. Russia's invasion of Ukraine is a factor driving these prices, experts told NPR. Here's Patrick DeHaan from GasBuddy. As more countries stop buying oil from Russia,

that means that these buyers have to find oil elsewhere. Russia is one of the world's largest oil exporters. The U.S. and U.K. have banned Russian oil imports. The EU is considering it. On top of that, there's a bottleneck at refineries. All that means there's little hope of short-term relief for drivers. And it means it's well worth spending some time unpacking what gas prices and inflation overall mean for the economy, especially for Americans on the lower earning end of that economy. My colleague Adrian Florido caught up with NPR chief economics correspondent Scott Horsley to do just that. You've been talking with people who have been coping with these high prices.

What did they tell you? Yeah, I talked with Holly McLean in Rockland, Maine. She has four kids and her husband works as a landscaper in the summertime and clears snow in the winter. McLean is really feeling the squeeze of these rising prices, even if last month's inflation rate was a little bit lower. I don't think it's getting any better. A gallon of milk used to be $3.75, and now it's $4.90. So, I mean, everything's gone up. McLean's kids go through a lot of milk. Her electric bill has also gone up to almost $200 a month, and she's noticed that

rebound in gasoline prices to $4.54 a gallon. I can tell you it cost me over $100 to fill my tank the other day. We're a six-person family, and my husband is the only one working, so money's tight. Even if you take out food and energy costs, which tend to go up and down a lot, the price of everything else in April was up more than six percent, three times as high as inflation ought to be. What really worries Tanya Byron in Jacksonville, Florida, is rising rent. It's pretty depressing. I make $42,000 a year and I can barely afford a one-bedroom apartment. Byron spoke to me from her tiny dining room, which also serves as her office as a travel agent. Byron says the apartment's

a throwback to another period in American history when inflation was painfully high. It was built in 1976 and they have not updated anything. I've got the original floors in the kitchens and the bathrooms, the original appliances, the original cabinets, the doors and the baseboards are painted brown. It's clean, but it's very basic. Apartment rents in Jacksonville have jumped 23 percent this year. Byron had hoped to buy a condo by now, but with home prices and mortgage rates also soaring, that seems out of reach. I am genuinely worried about the future, not so much even for myself, but for the people that make less money than I do. What is going to happen to the people making $15 and $18 an hour and the single mothers and people who have

mouths to feed. It's very scary to me. High inflation is particularly tough on families who don't have a lot of money to start with. Economist Dan Sickle of Wellesley College says those families tend to have less discretionary spending to cut back on. Typically, food and gasoline and housing are a bigger share of total spending for lower-income households than for higher-income households. What's more, Sickles says, lower-income families typically pay more even for the same goods. They might live farther from suburban warehouse stores and have less flexibility about where and when to shop. Lower-income households might have more limitations on transportation, might have less flexibility about where and when to shop. Lower-income households might have more limitations on transportation,

might have less of an ability to stock up when a particular item is on sale, maybe can't get the giant package of toilet paper to stash in a basement. Sickle chaired an advisory committee that says the government should try to include those differences in its cost-of-living calculations. That might mean reporting different inflation rates for people at different levels of income. The committee also suggests the government update how much weight it gives to different prices more frequently to account for the kinds of changes we've seen in consumer behavior during the pandemic. Early on, for example, people started buying more groceries and fewer restaurant meals. It was hoped that

inflation might cool off once people's consumption patterns return to normal, but it may just be that inflation migrates from one class of purchases to another. The Federal Reserve has started to crack down on inflation by raising interest rates in an effort to discourage consumption. Chris Waller, who sits on the Fed's Board of Governors, thinks the economy is strong enough to withstand those rate hikes without a big jump in unemployment. But Waller acknowledged there are no guarantees. Inflation is a tax that everybody pays. Unemployment is a tax a fraction of the population pays. So it really is this kind of touchy problem. We're trying to lower the inflation tax on everybody, but there's a small section of the society that may bear the brunt of that by losing their jobs.

There's no magical formula in a textbook that tells you how to do it, Waller said this week. You kind of have to take your chances and see where it goes. So, Scott, where do forecasters think inflation will go from here? It may well be that the 8.5% inflation rate we saw in March was the high watermark and that price increases will gradually slow down from here on out. We are starting to see a drop in the price of some goods, like used cars, for example, which were a big driver of inflation last year. On the other hand, we're also seeing a jump in the price of some services.

Airline tickets, for example, saw a big spike in prices last month, and that might continue this summer as people are traveling more, especially if airline fuel costs stay high. So it looks like the trail down from peak inflation could be long and bumpy. NPR's Scott Horsley talking to Adrian Florido. You also heard reporting earlier in this episode from NPR's Scott Horsley talking to Adrienne Florido. You also heard reporting earlier in this episode from NPR's Jennifer Ludden and Brittany Cronin. There are links to more in our show notes. It's Consider This from NPR.

I'm Mary Louise Kelly.