Historically high inflation still a concern to local businesses

Inflation has impacted just about every business in the Upstate, following supply-channel interruptions and energy hikes that have bedeviled businesses globally.

National inflation at 8.5 percent

The national inflation rate sits at 8.5% year over year, according to the U.S. Bureau of Labor Statistics, but that doesn’t exactly tell the whole story. Energy prices have increased 32.9% over the past 12 months, food prices are up 10.9%, and new vehicles were 10.4% more expensive over the past year.

Tom Barkin, president & CEO of the Federal Reserve Bank of Richmond, spoke at an Aug. 8 event hosted by the Greenville Chamber of Commerce and noted that before the pandemic the U.S. was enjoying 10 of the most stable economic years in recorded American history.

Despite efforts by the Federal Reserve to fight inflation by raising interest rates — a pattern the Fed has signaled will continue — inflation has persisted, risen and become broader-based, Barkin said.

“It’s like the aftershocks of an earthquake — it just takes a while for this amount of volatility to settle down,” he said.

As rates go up, the cost of borrowing money goes up, and the demand for products like homes comes down.

But although the recent inflation problem has lasted longer than economists expected, Barkin highlighted some bright spots. Freight costs are decreasing, he noted, and stores are seeing inventory go up. Meanwhile, gas prices have dropped in the past month.

Local businesses adapt

Steve Seitz, vice president and COO of Table 301, the parent company of a number of local restaurants like the Lazy Goat and Soby’s, said many of the price hikes are things that people might not ever see: higher costs to replace air conditioning units, for instance, and increased costs for things like computers and technology.

Consumables, on the other hand, have gone up even more precipitously.

Take crab meat, for example.

Before the pandemic, Soby’s bought crab meat at $15 per pound. Since the pandemic, it’s running around $36 per pound. Seitz said the restaurant has had to look for internal cost savings to avoid passing on price increases to customers.

“Some of our restaurants haven’t raised prices one penny,” he said.

Mary Walsh, co-owner of Swamp Rabbit Cafe & Grocery, has also seen a number of price increases — some she’s barely noticed and some topping 20%. When sourcing eggs, the locally owned grocery store avoids what it considers harmful factory farms. However, farmers faced doubling feed prices, which get passed on down.

“We don’t want to make things prohibitively expensive, but we want to make things viable,” Walsh said.

While prices have gone up in some instances, she doesn’t see a noticeable drop in business. She might see someone switch from organic to regular milk, but she doesn’t know of any non-anecdotal evidence.

“I don’t feel like it’s hurt us so much,” she said.

Inflation: 12-month percentage change

Source: U.S. Bureau of Labor Statistics