Prices jump in food, transportation, other everyday costs
BY FRANCINE KNOWLES Business Reporterfirstname.lastname@example.org January 29, 2012 12:52AM
64-year-old Elden Keeler and his 39-year-old son Christopher Keeler, who lives with him, try to sort out their bills for a story on how the recession has affected families. | Al Podgorski~Chicago Sun-Times
Updated: March 1, 2012 8:07AM
Want to go somewhere? Whether by plane, train or automobile, it’s costing you more.
Feeling hungry? Some grocery prices are enough to make you sick. But don’t get too ill; the medical co-pays will hurt.
Own a house, its value has plummeted. But, surprise! Your homeowner’s insurance premium hasn’t. And what you’re paying for water and sewer service now could make you cry.
The prices on a wide range of goods and services spiked last year and over the past few years. While overall consumer prices increased an average of 2.7 percent in the Chicago area last year over 2010, that Labor Department statistic doesn’t paint the full picture of the bigger hits higher prices in some key categories have been delivering to consumers’ wallets.
“There are a lot of things that are up and up a lot,” said Morningstar Inc. economist Robert Johnson. “I don’t know too many people who got a three percent raise last year.”
Indeed, many workers are grappling with pay cuts and shorter hours in the wake of the Great Recession and the loss of income after a spouse’s job was axed.
Health care and transportation saw some of the sharpest jumps.
Chicago area employees paid about 12 percent more in health insurance premiums and out-of-pocket costs last year than a year earlier and 41.6 percent more than they did in 2007, the year the recession started, according to Lincolnshire-based Aon-Hewitt.
Gasoline prices spiked an average 27 percent in the Chicago area in 2011 from 2010. That builds on an average 20 percent jump in 2010, according to AAA Chicago. And when looking at overall transportation, which besides gasoline also includes the price of new and used vehicles, automobile maintenance costs, parking fees, tolls, and other expenses, the average annual percent increase was 10 percent from 2010, Labor Department data shows.
State and local governments didn’t help. Highway tolls in the state nearly doubled this year to help pay for a construction and capital improvement plan. As of Feb. 1, Metra train fares are going up an average of 25 percent — higher in certain zones and for certain types of tickets, such as 10-rides, which will jump an average 30 percent.
Even a glass of water or a shower costs you more. The first of four water and sewer rate increases by the city of Chicago for Lake Michigan water users began this year with a 25 percent hike. Fifteen percent increases are on tap for the next three years.
Grocery food price increases averaged 4.3 percent in the Chicago area last year. The worst month was November, when prices jumped 6.8 percent from a year earlier, according to the Labor Department. Those averages don’t make readily apparent the sticker-shock brought on by double-digit price increases in some kitchen staples (See box).
It’s not as if consumers have more money to burn. Among private industry workers, wages and salaries in the Chicago area rose only 1.5 percent in the third quarter of last year from a year earlier.
“People are absolutely being squeezed,” said Johnson. “People really had to dip into their savings last year to finance some of their spending. Clearly they were strapped last year. . . . And if the recovery is going to continue in 2012, we need to see moderate prices because nothing stops an economic recovery faster than inflation, nothing.”
While inflation affects everybody, higher food and gas prices can be particularly problematic for lower-income households, who can spend as much as 30 percent of their income on such necessities, Johnson said.
Norridge resident Elden Keeler, who works as a part-time music teacher and musician to supplement his Social Security and pension income, says higher prices for food, gas and health care have made it difficult for him.
“I need to spend on gas to drive the couple of days that I work and to visit my mother in a nursing home, so I’m cutting back in other areas,” he said. “I’ve cut back on clothing, entertainment, things like that.”
Keeler, 65, shares his home with his 39-year-old son, Christopher, who has been living with him for more than a year since the Palatine restaurant he worked at as a cook shut down. The younger Keeler worries about not being able to help his dad with expenses.
“Many of my retirees and soon-to-retire are worried,” about higher prices, said Jeffrey Bruce, financial adviser with Crystal Lake-based Exemplar Financial Network and director of public awareness with the Financial Planning Association of Illinois.
“Inflation is very real, we see it in our food, fuel, education, medical, etc.”