How Businesses and People are Adapting to Increased Costs

• Author: Monica Jackson
• Posted: 2024-07-16

For all the political noise around inflation these days, there is no objective question behind the idea that inflation is increasing. This is occurring across a variety of metrics. Food, gas, and other utility costs are all increasing like never before, but there are also a variety of other goods that are increasing which are well out of the mainstream costs that usually rise during inflation. Indeed, on the whole, inflation - which has been consistently low throughout the decade - has hit 39-year highs.
The end result is that everyone is forced into making some painful adaptations in order to avoid inflation's sting. However, the adaptions that people are able to make vary widely by their own options and means, putting an even greater strain on the inflationary pressures that are hitting everyone in America today.

What's Driving Inflation

This issue tends to get politicized. On one hand, there is no question that the economic recovery that has occurred after COVID is driving inflation. People have jobs, money, and want to spend their hard-earned cash. The challenge, in many cases, is that they can't: Supply chain issues and labor shortages are creating a scarcity of goods, and thanks to the laws of supply and demand, prices are increasing as people compete for limited goods and businesses try to maximize their profits.
A variety of governmental safety programs put into place in the aftermath of COVID have also made a dent in inflation, though not by as much as people may have realized. Inflation is now a worldwide phenomenon, one that is occurring in places that did and did not have the kinds of robust social spending that America and other countries enjoyed.
All of this is leading to painful inflationary pressures across a variety of metrics.

How People and Businesses are Adapting

Every person is handling inflation in a slightly different way, utilizing methods that ultimately depend on their availability and options. For many people, inflation means making painful economic choices. That can mean altering purchase patterns, finding new places to shop, or putting less money away into savings. It can also mean much, much more aggression in terms of trying to find good deals.
The labor shortage is putting pressure on the creation of goods, but for many people, that means options. Many workers who believe they are not being paid fairly have struck out into the job market, finding new jobs that can put more money in their wallets. This helps to explain why there are currently so many job openings.
Businesses, too, have been forced to make painful decisions. Unlike consumers, they have the option to raise prices, and make are. However, many businesses are also attempting to limit the financial pain that their customers are enduring. They have options to do this, including absorbing some costs increases and encouraging customers to buy in bulk, thus limiting other cost increases.

Adaption Depends on Availability

A key thing to consider when it comes to shrugging off inflation's bite is that options are limited to what is within reach for individuals - no more, no less. This means that people who have the option to alter their shopping patterns can do so. For people who live in urban or suburban areas, this gives them more options about where to shop, how to alter their shopping patterns and ways to find the best deals. Competition can help to spur lower costs among businesses, thus helping to keep costs to a minimum.
For others, this isn't an option. Individuals who live in rural communities are far more likely to feel inflation's bite. They have all of the same problems, including low access to goods and employee shortages - but are even less able to do anything about these pressures. These factors combine to make inflation much more painful for these communities.
At the end of the day, inflation will likely remain a constant pressure well into 2022. This will, of course, have significant ramifications on the wallet's and personal financial situations of many throughout this country, but how serious of a problem it will be will ultimately come down to the financial options that others have.