(WGHP) — When the price goes up on one of your favorite items at the grocery store, you can always substitute it with something else. But when you own a restaurant that specializes in breakfast, there isn’t a lot of wiggle room.
“Eggs have gone up probably about 60% since we opened, and we sell a lot of eggs here,” said Steve Gingher, the owner of the popular Sage Mule restaurant on the north side of downtown Greensboro.
Gingher has had to raise his menu prices a bit since the pandemic’s inflation.
“It’s been incremental since 2020,” Gingher said. “Cost of living for our employees. That’s been, … a huge factor of why we’ve had to do a little of menu price increases.”
Wake Forest University Economist Todd McFall says there’s the rub: a big increase in wages hidden inside the general inflation.
“What we saw in the middle of 2022 was that consumers were willing to pay all of that price change … What ended up happening was wages went up in concert with that and once those prices start to do that dance, it’s really difficult to get them to stop,” McFall said.
But let’s step back a bit. Although monocausal explanations are rarely accurate, sometimes there are a handful of major factors that drive big events, and that’s likely what happened with the inflation of the last few years.
“Almost everything that we can imagine buying, especially that’s a physical good, is going to be hit by petroleum prices,” McFall said. “Petroleum prices over the last three years have increased rather dramatically, especially once the constraints of COVID started to wear off. Once people got inoculated and became comfortable to drive around and do things like they had in the past, they increased dramatically … Then they’ve fallen. But in that time period, you’re going to see some issues with things like grocery prices or clothes that we buy, anything that is made with petroleum and then shipped with it because you can’t escape it.”
And people didn’t feel the pain as much because the federal government made sure their bank accounts were full.
“Families were flush with cash because they weren’t doing a whole lot during the pandemic, and the Biden administration gave them a little bit more infusion of cash so people were ready to spend,” McFall said. “think this is really where I think the inflation culprit is … Gasoline prices rose, and then Russia went into Ukraine, and wheat prices spiked. Ukraine was responsible for 10% of the world’s wheat. Every loaf of bread, every cookie that you buy is going to be related to that. Wheat prices escalate quickly. They went up I think by 80% between Feb. 2021 and Feb. 2022 when the incursion started.”
A restaurateur like Gingher can’t stop the war in Ukraine, but he can give a little something to his loyal customers.
“A little compassion goes a long way,” Gingher said. “I think there’s a bigger picture. It’s not just how much your burger costs.”
See more about grocery prices in this edition of The Buckley Report.
