Consumer prices surge in May on LI, nationwide

Consumer prices in the country and on Long Island took another dizzying leap in May compared with a year earlier, propelled by spikes in the cost of gasoline and groceries.

Nationally, the consumer price index climbed 8.6% last month compared with May 2021. The increase was larger than April’s 8.3% and was again a rate of growth not seen in 40 years, the federal Bureau of Labor Statistics reported on Friday.

Locally, the index for the 25-county region that includes the Island rose 6.3% in May compared with a year earlier. That was the same year-over-year change that was reported in April.

Still, both price indexes climbed for the same reason: the cost of gasoline has doubled in the past 12 months — up 48.7% in May nationwide and 53.4% in the New York area.

Pump prices have increased more rapidly since Russia's invasion of Ukraine in February. They are a source of fury and disillusionment among motorists who are casting about for whom to blame. 

“The oil companies, the big corporations are making huge profits and the little guy is losing,” said Fred Weber, 72, of Oceanside, near the Valero station on Austin Boulevard in Island Park. “It used to cost me about $25 to fill up my Prius and now its $40,” he said.

Weber continued, “This is ridiculous. … How much longer is this going to go on?”

Inflation here to stay for a while

Probably through next year, economists said, citing the Russia-Ukraine war, supply chain disruptions and the labor shortage.

“Inflation is going to be at the level it’s at now, or above, for the rest of 2022 and probably 2023,” said John A. Rizzo, an economist and Stony Brook University professor.

“There are so many forces working against the lowering of prices, including the geopolitical situation in Ukraine, which is going to lead to food shortages and will further escalate prices,” he said.

Before Russia’s invasion, Ukraine was one of the world’s largest exporters of wheat and other grains. Also, Russia is a major oil supplier, but the United States and other NATO countries suspended shipments in response to the invasion.

With global turmoil upending economies, "a lot of this is out of the hands of ordinary people like me,” said Crystal Williams, 27, a waitress from Long Beach. “I’m cutting back on my spending in every way that I can and am looking for another job."

What can beleaguered Americans hope for?

Rizzo, the economist, said, “I hope we can get down to [an inflation rate] of 5% at some point before 2024, but I’m not sure.”

He and others asserted that while the price rises are maddening to consumers, they don’t foretell an economic downturn.

“On Long Island, we still have a strong labor market and [consumer] spending remains strong,” Rizzo said, adding that consumer spending accounts for 70% of economic activity. “I don’t see any kind of protracted recession or deep recession.”

Eating at us

While gas prices have been the most dramatic driver of inflation, it's not the only one.

The cost of groceries climbed 11.1% in the metro area in May compared with a year earlier. That’s the fastest rate of growth in 43 years, according to Martin Kohli, the bureau’s chief regional economist in Manhattan.

He said meat, poultry, fish and eggs increased 14.6%, year over year; cereals and bakery products, 10%; and nonalcoholic beverages, 9.9.%.

While the magnitude of price increases for gasoline and food is similar locally and nationally, that isn't the case for residential rent. Local rents climbed 1.8% last month compared with a year earlier; they were up 5.2% nationwide.

Kohli said the difference in residential rent hikes is why the price index for the metro area didn’t increase as much as the national index.

Other notable price rises in the New York area in May compared with a year earlier include natural gas, up 28.4%; used automobiles, up 17% and electricity, up 13%.

With inflation showing no signs of abating, more Long Islanders are having trouble paying for necessities. 

Tanya Bowman, who runs the food pantry at the Bread of Life World Outreach Center in Wyandanch, said, "We have lines that are forming even before we get here in the morning."

Small businesses also are being impacted, paying higher prices to vendors but being unable to pass along that full cost to customers.

At Hope's Land of Candy in Island Park, majority owner Joan Cohen said, "Our prices have gone up a little bit but distributors have been working with us, giving discounts and free shipping."

The prices that the soda fountain and candy store pays for jelly rings, malt balls, licorice, chocolates and other items have increased but Cohen vowed not to pass along the full cost to her customers.

"If it's up 70 cents, I only raise my price 50 cents and I only raise prices once a year — in January," she said.

Cohen added that the family-owned business hasn't seen a decline in the number of shoppers or the size of their purchases. "They are still buying," she said.

Pressing Biden

The National Retail Federation in Washington, which represents large and small stores, called on President Joe Biden to repeal U.S. import taxes on products made in China. 

"Independent researchers and government agencies agree that ending tariffs [imposed by then-President Donald Trump] is the fastest way to relieve the pressure of higher prices that American businesses, workers and consumers are facing every day," said federation CEO Matthew Shay on Friday.

Biden didn't mention tariffs when he commented on the price index. Instead, he said Congress should pass legislation that would lower shipping costs, energy bills and prescription drugs.

Biden blamed Russian president Valdimir Putin for invading Ukraine, calling inflation "Putin's Price Hike." Biden also criticized corporations, including oil providers. 

“Exxon made more money than God this year,” he said.

ExxonMobil responded to Biden's comment by saying that it is producing more oil.

On Long Island, Uniondale resident Miguel Valentin said the United States "is going in the wrong direction" and inflation is just one of many problems.

— with Cecilia Dowd and AP

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.