There are many factors that are playing into the rising costs. Rising wealth in developing countries plays into supply & demand. Global flooding & heavy rains have damaged crops which again plays into supply & demand. Essentially, it’s a Perfect Storm that has led to higher costs for consumers.
- Clothing: Hit the clearance sales & buy fall & winter clothing now. Why? The price of cotton rose 80% in 2010. Polyester prices rose 20-25% last year. Manufacturers have held off on price increases, but there is no way they can continue to do so & be profitable. According to the Wall Street Journal Hanesbrands, Inc., Jones Group, Inc., & VF Corp. have all stated they will raise prices by as much as 10%. Carter’s Inc. stated that costs for their Spring 2011 line rose by 11% & expect the costs to rise even further for their fall merchandise. Buy now on clearance & avoid the price increases we will see next fall.
- Tires: This may seem random, but if you will be needing new tires this year, consider buying them sooner than later. The bulk of rubber is produced in Southeast Asia where cyclones & flooding have hit hard recently, sparking fears of short supplies. Goodyear Tire & Rubber Inc.’s rubber costs rose $412 million in 2010. I’m guessing tire prices will go up in 2011, so if you need to replace yours, look for a good sale early this year.
- Food: Here is where stockpiling really comes into play. Combining sales, store coupons, & manufacturer coupons can often get you free or very inexpensive non perishable goods. Take advantage of this! The USDA claims food costs will rise 2-3% in 2011. Overall meat prices will rise 2.5-3.5%, with pork products rising an estimated 3-4%. The biggest increase will likely be dairy products, with an estimated 5.5% increase. The Wall Street Journal is reporting that by September 2011 the U.S. corn crop will fall to the lowest level in 15 years & the soy crop will fall to the tightest level in approximately 30 years. Additionally, an agricultural economist interviewed by the Wall Street Journal claims that the cost of beef & pork might rise as much as 10%. To minimize the effect on your budget, clip coupons, stack them with sales or store coupons, & build up your stockpiles. Free up as much of your budget as you can for the items that are difficult to save on. Plant a garden & grow your own produce. Plan ahead now for ways to keep your grocery budget in check.
Obviously no one knows what 2011 will bring, but if the predictions are remotely accurate, we will be paying more for our day to day expenses. Thoughtful planning & intentional shopping will keep the effects of rising costs on your budget to a minimum.
Photo courtesy of East County Magazine.