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It’s not just the Rocky Mountains that are giving the residents of Colorado a steep hike right now: inflation, too, has been on the rise for some time and is causing real headaches for those living or working in the state.
Although there are some signs that the economy is stabilizing, food and travel costs, especially, are pushing family budgets to the breaking point, and many people are cutting back on things that were previously considered essential buys.
Eating into Family Budgets
Coloradans are increasingly paring back their grocery shopping, with consumers, in general, eating less meat and making the most of multi-buy deals and discounted prices to save money. Families are now, more than ever, making a budget for the weekly food shop to reflect the rise in grocery prices: in the Denver area, the cost of food in May was up 8.3% as compared to last year. This concern with budgeting can also be seen in buyer habits: more and more people are switching from high-end or branded goods to cheaper or store brand alternatives in a bid to make their cash go further.
A recent survey revealed that nearly half of those polled in the state believed themselves to be in a worse financial position now than pre-pandemic, and the rising cost of food staples is playing no small role in this situation.
Driving Up Motoring Costs
Transport costs are also hitting Coloradans hard, with gas prices reaching the dizzy heights of $5.03 per gallon in Durango earlier this month. And there’s unlikely to be any respite either, with the cost of gas expected to continue to rise over the coming months; some residents are already talking about having to choose between gas or groceries in the near future, while others have taken to visiting food banks to make ends meet while the price of fuel is so high.
The environment could be an unexpected beneficiary of inflation’s effect on the cost of fuel, though, with a significant number of Coloradans reporting that they’re now walking, where possible, rather than jumping in the car.
The Overall Impact of Inflation
As well as food and gas, rising prices have also affected the cost of housing and all other products and services purchased by consumers. The surge in inflation means that, overall, the average Coloradan household has shelled out nearly $6,000 more since 2020 than they otherwise would. Transport is responsible for the lion’s share of this figure, followed by housing costs, food, and medical care.
Retailers are responding by either increasing their own prices or applying the principle of ‘shrinkflation.’ This means hiding a price hike by offering a reduced version of a product: so, for example, you may not notice any change in the cost of your candy bar, but if you look a little closer you may discover that it’s 10% smaller than it used to be.
The Link to Higher Wages
The average wage in Colorado has increased significantly over the last year, which has also played a role in keeping inflation rates on the rise: the cost of a business to pay an employee more is often passed on to the customer or service user.
This wage hike has largely been the result of employers finding it difficult, during and after the pandemic, to fill full-time positions – issues of staff sickness or resigning due to a better job offer have taken their toll in this regard.
The Future of the Economy in Colorado
As we mentioned at the top, things will get better – slowly. Although inflation is causing heartache for many households, the rate of inflation in Colorado is actually lower than it is elsewhere in the US. Some experts believe that this is because the state was one of the quickest to recover from the downturn sparked by the pandemic: the comparatively swift return of residents to work has had a knock-on effect concerning pricing pressure.
The recent hike in rates by the Federal Reserve aims to restore balance and bring inflation back under control, something that financial analysts agree should be well underway by the end of the year, with 2023 bringing some stability back to the markets – and the budgets of hardworking Coloradans. And in the meantime – it’s been reported that the Federal Government is mulling over a pause on gas tax to give hard-pushed motorists a helping hand.