#inflation #prices #shopping #rent #gasoline #groceries
If something costs too much, don’t buy it.
That can’t be said for everything, since we all need housing (rents), fuel for cars (gasoline), medication and food (groceries).
But, according to Christopher Rugaber, business and economics reporter for the Associated Press, companies are starting to lower their prices because people just aren’t buying their products in the volume they would like, at the prices they want to charge.
Apparently, it’s working. Last week, inflation dropped below 3 percent for the first time since 2021.
Rugaber’s article on the subject was published August 13, 2024, in The Atlanta Journal-Constitution.
Before Rugaber’s article, McDonald’s reportedly started lowering their prices on some of its most popular items because there were too few diners at many of their restaurants. It showed in their earnings report.
It’s good also to remember that government has little leverage in bringing down prices. It can do what it can for things it can regulate, such as bringing down the cost of insulin to $35 for senior citizens. One big lever they have is allowing Medicare to negotiate prices. This has helped bring down the government’s cost for 10 popular drugs.
But, what really helps bring down prices is the lack of buyers.
It’s simple economics. Set a price, see whether the market will bear it and adjust as the market adjusts.
For businesses, particularly small businesses whose product is not an absolute necessity, it’s a much tougher decision. Usually, these businesses know what prices the market will bear for their finished product. But, can they produce that product at a cost that not only covers what it costs them to make it, but also puts a little profit in their pockets?
It’s a struggle for some of these businesses, many of whom are facing labor shortages. When workers are few, they will demand higher wages. Can these businesses keep their workers happy, pay for ingredients that produce high quality products, pay for their workspace AND make a profit?
The bigger corporations have more pricing flexibility. If they, like McDonalds, see less traffic in their retail spaces because of prices, they usually can adjust to that more easily.
Sometimes that doesn’t work well for some of those who work for them, since labor is one of the places that corporations adjust.
In all, reports say that, given the labor shortage, most workers have seen their pay rise. A lot of the things we buy are priced higher to pay workers more. In most cases, workers’ raises are more than the price increases they are paying for necessities.
As Rugaber’s article implies, consumers are working hard at changing what markets will bear – whether they realize it or not.
So, here are some handy rules for buying: If it is something you need to survive, try to use less of it. (Don’t drive around in a 4X4 pickup truck if you don’t need to haul anything). If it’s something you want badly, but don’t absolutely need, look for bargains. It may not pay to drive five or six miles to save two cents on a gallon of gas, but it might make great sense to shop around if you’re in the market for, say, a big-screen TV.
Another rule: don’t long for the days of the pandemic when prices on just about everything were lower because people weren’t going anywhere. The disease was too much of a cost just to have lower prices. (By the way, the air was also cleaner during the pandemic, but that’s a story for another day).
Inflation ultimately adjusts when fewer people buy. So, work hard at your job, make as much as you can and try to spend carefully. Also, try to pay yourself first by saving a little of that paycheck for your future.
Peter
Tag Archives: shopping
DO YOU CLIP COUPONS AND THROW THEM AWAY?
We are inundated with coupons.
Merchants use them for effective marketing.
But many have an expiration date on them.
Wise shoppers clip coupons for only what they use – or might use.
If you happen to need that can of artichokes before the coupon expires, you put a few cents in your pocket when you buy it, using the coupon.
But here’s the reward: if you didn’t need it before the coupon expires, you put the entire cost of the item back in your pocket, and throw the coupon away.
As you do, do you feel as if you’ve thrown THE VALUE of the coupon away, or have you saved money by not buying the item?
If you have storage space in your home, you could have bought the artichokes at the coupon price and stored them until you needed them. That would have been wise, if you could do it.
Or, you could shop several stores and see what artichokes go for. If you find them below the coupon price at a store that won’t take your coupon, the shopping effort is worth it, providing you won’t see your savings burned up in gasoline to get to that other store.
The point here is that when you buy things you use, there are ways to save lots of money with a little effort. Countless people don’t bother to use coupons. They can’t be bothered clipping them. They throw lots of money away. Over years, those little, unused savings add up. They might even mean the difference between retiring at, say, 60, and having to work until, say, 70.
Saving money is not rocket science, but you have to devote some time. Very few people go into the first car dealer they see to buy a car. Very few people would have a Realtor take them to look at one house, and buy it on the spot. But we seem to think that a penny here, a nickel there, a dime over here makes no difference in our lives.
LITTLE THINGS, BIG PICTURE
This is where little things form a big picture. It’s OK to clip a coupon and throw it away. Obviously, you didn’t need the item when it was on sale. You may know people who will buy something JUST BECAUSE it’s on sale. They’ll take it home, and maybe they will figure out how they can use it.
Know what you use, and buy only what you use!
By the way, electronics are usually big-ticket items. One could go broke keeping up with the trends in gadgets. Have you ever met a person who will cheap out and cover over a roof leak only with shingles, and not replace the wood underneath, but has every electronic gadget imaginable inside their homes?
These are misplaced priorities. Do you have your spending priorities straight? That will go a long way to a great life.
If you are a careful shopper, visit www.bign.com/pbilodeau. Check out the plethora of big savings, and little ones. You’ll also see a way to earn potentially a lot of money.
The next time you see a person down on his luck, and you feel comfortable giving that person advice, ask him whether he knows where every penny of what he earns goes. Chances are, he does not. He spends without thinking, much of the time. Those who spend carefully may not have every trendy thing, but they have what they need – and much of what they might want. Little actions, multiplied over time, can pay big dividends.
Peter