How is COVID impacting prices?

Rose Thun

Jul 25, 2020

Hello Again,

COVID is a giant curveball of life right now. If we’re lucky, that is all it is.

The best summary of COVID impacts to consumer prices by type and region that I’ve seen is on the BLS site https://www.bls.gov/news.release/pdf/cpi.pdf from June 2020 and show much less variability than I’d expected to see.

Expenditure Changes So Far with Covid-19

As of April 2020, COVID-19 disease has spread across the country in all population densities. The early data shows changes in consumer expenditures.

Source: https://usafacts.org/visualizations/coronavirus-covid-19-spread-map/

Food

Food prices have increased 2.6 percent more in April 2020 for groceries, the largest one-month jump since February 1974 but have been less extreme since per the BLS Consumer Price Index data.

Sources: https://www.washingtonpost.com/business/2020/05/12/april-saw-sharpest-increase-grocery-store-prices-nearly-50-years/ and https://www.bls.gov/news.release/pdf/cpi.pdf from June 2020.

Healthcare

Healthcare cost increases are not yet known but current estimates are 2-20% premium increases. Additional description of what may contribute to increased costs is described in the VOX article below.

Sources: https://www.coveredca.com/newsroom/news-releases/2020/03/24/covered-california-releases-the-first-national-projection-of-the-coronavirus-covid-19-pandemics-cost/. And https://www.vox.com/coronavirus-covid19/2020/4/1/21202148/health-insurance-premiums-coronavirus-covid-19. and https://healthpayerintelligence.com/news/covid-19-projected-to-drive-increased-costs-for-consumers-employers

Transportation & Commute

Transportation costs are decreasing in mass transit, air travel, gas, and automobile prices. This corresponds with an increase in the cost of air freight and trucking, which may impact food prices. Before COVID-19, the US average was 4% of people working from home; during COVID-19 the new estimate is 20%.

Sources: https://www.citylab.com/perspective/2020/03/coronavirus-public-transit-fares-free-rides-bus-covid-19/608350/, https://www.reuters.com/article/us-health-coronavirus-usa-prices/how-covid-19-affected-us-consumer-prices-in-march-idUSKCN21S20H, https://www.marketplace.org/2020/03/24/air-freight-prices-surging-amid-covid19/, https://www.dat.com/blog/post/covid-19-response-disrupts-freight-flows-and-rates and https://www.statista.com/statistics/1110076/share-adults-work-situation-covid-19-us/

Housing

Housing costs are down with lower fuel costs, lower mortgage rates & increased refinancing. Real estate sales volumes are down but opinion varies on prices impact. Motley Fool says prices are not yet impacted, but Curbed said real estate prices on average in the US are down 8%.

Sources: https://www.reuters.com/article/us-health-coronavirus-usa-prices/how-covid-19-affected-us-consumer-prices-in-march-idUSKCN21S20H and https://www.fool.com/millionacres/real-estate-market/articles/will-the-covid-19-crisis-push-home-values-lower/ and https://www.curbed.com/2020/3/6/21163523/coronavirus-economic-impact-housing-market

Taxes

Taxes due dates have been deferred temporarily; the longer-term impact is likely to be an increase in taxes across the globe in response to the effects of COVID-19. https://taxfoundation.org/coronavirus-tax-tracker-covid19/ has detailed coverage on this topic by State.

Best wishes for good health and peace to you and your loved ones. If you have any questions, or feedback, please send me a note at Hello @ ChooseMYHappyPlace.com

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