Inflation hits home for lower-income groups

U.S. wages actually have been roughly keeping pace with inflation for the average American, according to Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pa. But the recent trend means they likely won’t be in the future, he said.

Lower-paying jobs also are more vulnerable to price rises and perhaps less likely to keep pace.

In Duluth, the 48-year-old Connlley, who makes $9 an hour as a receptionist, is buying more noodles, lower-quality meats and more canned vegetables instead of fresh ones to try to cope.

“In the last couple of years, it’s gotten worse,” she said. “You go to the grocery store now and spend 50 bucks and walk out with a bag, where it used to be enough for two weeks.”

Not only does she feel inflation’s pinch on her own lifestyle, she sees the consequences on others in her job at a low-income affordable housing organization in the northern Minnesota city. Some 28,000 people in a population of 86,000 are under the poverty line there, according to Sonia Bonilla of the nonprofit group Community Action Duluth.

“Every day I see people making other choices” because of the costs crunch, Connlley said. “To eat healthy is way more expensive than to eat mac and cheese.”

Retirees worst-hit
Retirees can be among the worst-hit by inflation since their income tends to be fixed. Hunt, a retired math teacher, relies primarily on investment income but nonetheless says inflation has “definitely” affected his lifestyle.

“Restaurants are the biggest noticeable increase, but everything has increased to some extent,” he said. “It costs us probably twice as much extra for eating out as it does extra for gasoline, and we travel quite a bit.”

Shannon Hill of Barrington, N.H., is angry about rising costs and has taken steps to deal with them, including buying a bicycle to get around town.

“I am absolutely dumbfounded by the price of gas these days and the impact it has had on my everyday expenses,” said Hill, a publicist. “Everything from my drive to the convenience store for milk to my purchasing a home and even my traditional after-work pint (of beer) has been affected by the price of one single good — oil.”

Other middle-class Americans aren’t really bothered by loftier prices.

“We’ve felt little economic impact,” said Randy Williams of Kansas City, outside of paying more to tank up his SUV.

“Most of my friends are middle class as well and I don’t know of any who have cut back on their spending. It kind of seems to me that all of the talk about a tough economy is just that, talk.”

Swonk says the biggest concern for consumers will continue to be oil prices, which ultimately affect the cost of driving to the store to rent DVDs, pizza deliveries and other non-necessities. The bout of higher inflation, she said, likely is temporary in an economy that has proven itself largely inflation-resistant in recent years.

“People aren’t spending on as many frivolous things,” she said. “But it is not the double-digit inflation that we once faced.”

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