In recent months, the rising cost of living has become a pressing concern for consumers worldwide. According to leading economist Torsten Sløk from Apollo Global Management, since early 2020, prices have surged by an average of 25%. This trend is particularly evident in everyday essentials like groceries and services such as insurance and medical care. The January Consumer Price Index (CPI) report highlighted a significant year-over-year increase of 3%, with core prices climbing by 3.3% compared to the previous year. Notably, the price of eggs has skyrocketed by 53% annually, reaching its highest level in nearly half a century. Factors such as the bird flu epidemic have exacerbated these issues, leading to substantial shortages and higher costs.

Rising Prices Across the Board

In the midst of a golden autumn, shoppers are noticing steeper prices at grocery stores and service counters. Since the start of 2020, the cost of goods has risen sharply, making daily purchases more expensive. Economists point out that inflation has been steadily increasing, with the latest CPI figures showing a notable 3% rise over the past year. Month-over-month comparisons reveal an even sharper spike, with a 0.5% increase from December to January, marking the most significant jump since August 2023. Core items such as insurance, healthcare, and vehicles have seen a 3.3% increase compared to the previous year. Among food items, eggs stand out as the most affected, with prices soaring by 15.2% in just one month, the highest monthly rise since June 2015.

The underlying cause of this surge in egg prices can be traced back to the devastating bird flu outbreak, which has decimated poultry populations. Consequently, the average price of a dozen eggs has climbed from $2.52 at the start of last year to significantly higher levels today. Some retailers in New York City have even resorted to selling individual eggs due to the scarcity and high demand.

Reflections on the Economic Landscape

From an economic perspective, while inflation can slow down, it rarely reverses. As Sløk explained, although inflation rates have decreased from 9% to around 3%, the overall price level remains elevated. He emphasized that deflation, or a general decline in prices, would be far more detrimental, potentially leading to severe recessions and unemployment rates as high as 20%, reminiscent of the Great Depression era. Therefore, maintaining employment and tolerating slightly higher prices may be the better option for economic stability.

Ultimately, the ongoing challenge for consumers lies in adapting to these rising costs, especially in critical areas like housing, education, and healthcare, which have seen the most significant increases over the past five years. Understanding the broader economic context helps us navigate these changes more effectively.