The pandemic brought a spike in prices — but the future looks brighter
The pandemic has wrecked many Mami-Dade businesses and put tens of thousands of locals out of work. But even for those who still have jobs, COVID-19 has brought financial stress in the form of higher prices.
While the Consumer Price Index in South Florida rose 0.7% between April and June, according to the federal government, the grocery index jumped 3.2%. Some restaurants have added surcharges for “protection measures,” as have some doctors’ offices.
Projections call for an easing of prices and boost in the economy as the year progresses. It can’t come soon enough for locals like Jilma Guevara, who lost her job as a security guard at Miami Airport in March. With a rent payment of $1,600 per month and a monthly medication bill of $300 for her diabetes, she worries about how she will survive now that the $600 weekly federal unemployment boost has ended. Florida’s unemployment compensation is no more than $275 per week.
“I have to eat,“ said the 57-year-old security guard. Since the pandemic began, she has seen her supermarket bill increase by 15% to 20%. She has not applied for food stamps.
She’s angry, too, she said, that her employer, Eulen America, received millions in federal aid from the CARES Act to retain workers but has not rehired her. Guevara has worked at the airport for over a decade.
“This is the first time that I am unemployed and I hope it is the last,” said Guevara. She doesn’t like depending on government aid, she said, and longs for the time when she can return to work. She’s filled out dozens of job applications, she said, but has received no responses.
“We are going to have to move in with someone else and share expenses or find someone to come here and live here,” said Guevara, who lives with her daughter. Her daughter has a job but it isn’t enough to cover expenses for both women.
For Sandra Viera, a health professional who earns more than $100,000 annually, the cost-of-living increase is less burdensome. Still, she has noticed a bump in prices that has added about $50 per week more to her grocery tab than prior to the pandemic.
“It is an expense that has been added to so many commitments that we already had,” she said.
WHY THE BUMP?
According to experts, the increased cost of food is a function of increased demand and a contraction of production. More people working from home has translated into more home cooking — and eating. An explosion in baking during the shutdown led to shortages of flour, yeast and other supplies. Meals consumed at home between March and June grew by 4.3%, according to Nelson Sotomayor, an economics professor at Miami Dade College.
At the same time, many meatpacking plants were hit with coronavirus outbreaks, resulting in slowdowns and closures. While outbreaks have been controlled and production gradually increased, it still has not resumed normal levels.
“Prices went up solely for demand reasons,” said Sotomayor.
Transportation costs also factor into the equation. Though gasoline prices remain low, he said, transportation companies have implemented costly security measures to prevent truckers from becoming infected.
And grocery prices will likely remain high, he said. Many companies will close offices and continue remote work — which means fewer street lunches and more food cooking.
Restaurant, rents
As for COVID surcharges at restaurants, public opinion appears to be split. While some customers are unhappy with the fees, others feel more secure knowing sanitation is a top priority.
“It’s legal as long as the restaurant advises the customer in advance,” said Sotomayor. Some restaurants have added the charge in lieu of raising menu prices, he noted, and to avoid the cost of printing new ones. “Simply, when the pandemic ends, they eliminate the COVID fee, without having to raise prices first to lower them later.”
One positive impact, he said, is that rents are rising less slowly.
“In 2020, rent in Miami-Dade has risen 1.3%, while last year the increase was more than 4%,” said Sotomayor. “It is not that it is going down, but that they are increasing at a much lower level than in the past.” Job losses and a slowdown in the number of people moving to the area are affecting rent prices, he said.
More than 50% of Miami-Dade’s residents pay more than 30% of their income on rent.
Meanwhile, housing sales prices have risen “slightly,” he said, thanks to historically low interest rates.
As for medical expenses, prices rose 1.3% from March to June throughout the country. But there’s good news: prices boosted by shortages of hygiene and protection products have receded to normal levels as production has increased.
And the economy appears to be on an upswing. Sotomayor pointed out that the Federal Reserve Bank of New York is projecting a third-quarter increase in economic activity of 14.8%.
All that could change if the country experiences a second outbreak of COVID-19.
“We will have a clearer idea when the children start to go back to school. If they are infected, the parents have to stay home to take care of them, and that will have a work implication,“ concluded Sotomayor.
This story was originally published August 18, 2020 at 7:00 AM.
