Inflation Has Surged From The Pandemic Recession — But That Isn't Stopping Buyers

MARY LOUISE KELLY, HOST:

New and used cars are getting more expensive, so is the gasoline that powers them. And when you pull up to a drive-through, you can expect to pay, yes, more for your burger or burrito. Prices are climbing for all kinds of things as the U.S. rebounds from the pandemic recession. But so far, sticker shock is not stopping buyers, as NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: John McConnell is shopping for a new four-wheel-drive truck. He's been driving a 2-year-old Nissan Altima, but he and his wife want something more in keeping with their outdoor lifestyle in Colorado Springs.

JOHN MCCONNELL: We want something that we can kind of stretch our wings with and maybe do a little bit of camping, a little bit more of the outdoor activities with - you know, a little Nissan's not going to cut it on a lot of the roads around here during the winter.

HORSLEY: McConnell's heard about the computer chip shortage plaguing automakers, so he expected some challenges finding a truck. But he was still surprised by the prices advertised for a new Toyota Tacoma - thousands of dollars over the sticker. Still, he and his wife have kept working during the pandemic, so they're not turned off by the high price.

MCCONNELL: I'm not going through a midlife crisis. I just kind of have an itch for this if that makes sense. I'm willing to pay a little bit more right now, I guess, because right now I can afford to.

HORSLEY: And that, in a nutshell, is what's driving higher inflation in the U.S. - strong demand after a year of being cooped up during the pandemic, limited supply due to shortages of key components like computer chips and plenty of money to go around.

(SOUNDBITE OF ARCHIVED RECORDING)

WARREN BUFFETT: It just won't stop. People have money in their pocket, and it is not a price-sensitive economy right now in the least.

HORSLEY: That's billionaire investor Warren Buffett at his company Berkshire Hathaway's annual meeting last month. The company sells everything from See's Candies to manufactured houses. And it's dealing with prices for steel, timber and oil-based products that are all higher than anyone imagined just six months ago.

(SOUNDBITE OF ARCHIVED RECORDING)

BUFFETT: It's an economy - really, it's red-hot.

HORSLEY: We'll get the latest temperature check on inflation when the Labor Department releases the consumer price index for May. Prices in April were up 4.2% from a year ago, when much of the economy was shut down by the pandemic. Rising prices are a hardship for some people. Justin Bergin's work as an art installer pretty much dried up last year. He's been scraping by, selling his own paintings. The single father in Baraboo, Wis., pays particular attention to prices at the grocery store.

JUSTIN BERGIN: Feeding three children isn't an easy task on a budget to begin with. But now that the prices are going up, I find it's even harder to get a full grocery cart.

HORSLEY: Bergin says he's buying a lot more rice and pasta these days. He's also having to tell his children no more often. Both the Biden administration and the Federal Reserve argue the jump in inflation is likely to be temporary. Some prices, like airline fares, are just getting back to normal after a steep plunge during the pandemic. Others are the result of bottlenecks that should work themselves out as supply catches up to demand. The burrito chain Chipotle said this week it's raising menu prices to help cover its new $15-an-hour wages. Officials don't believe that's the beginning of an upward spiral in prices and wages like the 1970s, but Treasury Secretary Janet Yellen says she will be alert for that.

(SOUNDBITE OF ARCHIVED RECORDING)

JANET YELLEN: We will watch this very carefully and try to address issues that arise if it turns out to be necessary.

HORSLEY: One could look at higher inflation as a sign the economy is healing after a very difficult year. Artist Justin Bergin says of all the shortages we've experienced during the pandemic, the lack of human connection was among the worst. As hard as it's been, he says, he felt enormous relief once he got vaccinated and was able to see friends once again.

BERGIN: Oh, my God, yeah. I went to an art opening, and I saw a friend from grad school. And we gave each other a hug, and I just felt, like, this wave of joy wash over me like, wow, another adult, another person who's going through stuff. And we're here at the same time. It's just wild.

HORSLEY: That's a priceless feeling that won't show up in the consumer price index.

Scott Horsley, NPR News, Washington.

(SOUNDBITE OF TREVOR SOMETHING SONG, "ETERNAL LOVE") Transcript provided by NPR, Copyright NPR.