Hot Wheels, Hot Dogs, and The Ugly Truth About Inflation

Inflation. It's not a nice word. It doesn't bring that warm, fuzzy feeling when someone mentions it, but it doesn't have to be bad.

Usually, people have a visceral, adverse reaction to anything related to inflation. Knowing the science behind how and why inflation happens can offer a better perspective on this relatively common economic situation. Thanks to Life and My Finances, we can get a better look at some of those studies on how inflation affects the prices of goods and services.

Things That Go Up

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Generally, inflation causes prices to go up. Goods and services start to escalate their prices inch by inch, causing the average working person to allocate more and more of their paycheck to those higher costs. The first places inflation shows itself are in fuel and grocery prices.

Gasoline and food are where higher prices become evident almost overnight.

 Egg prices more than doubled from 2018 to 2023. Those eggs that started at $1.74 have shot up to $3.45 for the same dozen. And we're not talking about organic, free-range, cage-free eggs. That's just your standard dozen of large, white chicken eggs.

Fuel was another cost that skyrocketed from 2002 to 2022. In the early 2000s, natural gas delivered to residential consumer buyers was somewhere around $7.89. By 2022, it had doubled to $14.8. Despite the 20-year gap, this massive price jump caused people to need help heating their homes over the long winter months from 2022 to 2023.

Transportation costs had the steepest price change from the start of this inflationary period. Add rising fuel costs, and you get a double-whammy that drastically affects entire sectors of the economy. Airline tickets, rental cars, and new and used vehicles all saw a dramatic price increase that, as always, got passed onto the consumer.

Most of the time, these prices tend to go up and stay up with little change, even when inflation dies down. Airlines are particularly gloomy about dropping costs once they've made that jump to a higher price.

Things That Go Down

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While inflation is a general price increase with a fall in the purchasing power of money, it doesn't mean that all prices go up across the board. Some items will see a decrease in their overall price rate.

Many electronics sectors saw an overall decrease in prices or a jump in revenue, making it an inflation-proof area of the economy. Smartphones, televisions, audio and video products, and even digital tools all saw a steady sales rate with little change or an increase in price rates.

  • Apple CEO, Tim Cook, revealed four new smartphone models ranging from $799 to $1099, keeping in line with their current 2022 prices.
  • In a single year, prices for televisions dropped 14%.
  • Audio and video merchandise saw a 5.5% decrease during the same 12-month period.
  • In June 2022, electronic prices dropped 7.3% over the same month of the previous year.
  • In March 2023, the price of smartphones overall fell by 23.9%.

Dropping prices, rising revenue, and prices that stay the same aren't naturally indicative of inflation, but they commonly occur alongside increasing costs in other sections of the economy.

Things Stay The Same

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Occasionally, some items don't have significant price changes, even when inflation rages. For the better part of the last decade, products in the food and toy parts of the economy have remained steady. Items like hot dogs and soda, hot wheels, and iced tea have all faired well, no matter the economic outlook.

For the last 20 years, Arizona iced tea has stood at just $.99. Even more impressive, Costco's hot dog and soda combo has been $1.50 for 50 years running. For their part, Hot Wheels stayed under $1.00 for 37 years at places like Walmart, and even on Mattel's website, they're only up to $1.25, although most of their models come in sets.

The Good, The Bad, and The Ugly

Cost of Living
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It's no surprise to anyone who makes regular online or in-store purchases that prices for just about everything have risen considerably since 2020. Interestingly enough, however, street drugs and legal drugs that are resold on the street haven't been adversely affected by inflation.

Demand-pull and cost-push are two factors that usually cause prices to go up during inflation. When demand or the cost for supplies goes up, so too does the price of those goods or services. Demand and supply costs must decrease for prices to decrease during inflation.

While inflation, for most people, brings on financial difficulty and forced cost-cutting measures, some benefit from a continual rise in prices. This current inflationary period is excellent for toy collectors, those purchasing electronics, particular food and beverage consumers, and anyone dabbling in the illegal drug trade (obviously not recommended).

The sad truth about inflation is that it'll be around for the foreseeable future. Prices will continue to rise, even slowly, and will stay higher than usual. If wages don't rise to match or the Federal Reserve doesn't raise interest rates fast enough, those prices will continue to cause a money pinch for 99% of consumers. For most of us, that'll mean continuing to pinch our pennies and stricter budgets until inflation starts to ease and get closer to the Fed's 2% expected annual inflation.

If you're looking to hedge your finances against rising inflation, investing in physical gold and silver is an excellent way to preserve your assets. Silver and especially gold are fantastic stores of value for your money because, unlike the dollar, they will not depreciate or lose their purchasing power as money does during inflation. Because they remain consistent, they will still be worth their weight, so to speak, when the currency continues to lose its value.