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SALT LAKE CITY — While prices at the pump are becoming painful, the cost of a lot of other items we regularly buy has gone up in the last year as well. But some economists say this could actually be a good thing.
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Whenever gas prices jump up, inevitably someone or some media outlet does a story comparing the price of gas to other liquid items. What about nail polish?"Typically when you see an increase in price, you're also seeing improvements in employment, you're seeing improvements in the number of products that are being introduced, you're seeing an investment in research and development," explained Randy Shumway, CEO of The Cicero Group.
In other words, slightly higher prices are an indication that people are spending again. It shows the economic engine is moving forward.
That said, what's going up?
Some things are subtle:
- Online phone services, known as Voice Over Internet Protocol (VOIP), are getting extremely popular, and therefore a hike.
- The same is true with downloaded music. It used to be 99 cents a song; now some are 30 cents higher.
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Farmer Tyson Roberts is trying to keep himself busy these days, anxiously staring at the skies, praying the rain clears out and the sun moves in.Many price hikes are due to events occurring in other parts of the world. High oil prices, Shumway says, are due to "anxiety and uncertainty toward the political unrest in the Middle East." And that trickles down, affecting many other things.
"You've got higher gasoline costs, which mean higher transportation cost to get clothing, to get food and every other material, to get to the retailers," Shumway said.
Ammunition prices are up because of the demands from the Middle East wars and higher prices in the metals used to make the bullets. Also, airline fares are up, as are movie tickets and admission prices for sporting events.
Another event that affects higher prices is poor weather. Crops worldwide have been delayed or ruined this year.
"Closer to home, you're seeing what's occurring on the Mississippi is going to significantly affect crop yields," Shumway said, "and that will increase the costs of food."
The flooding certainly hurts the economic conditions in those affected areas. But in general, food and transportation are big players in prices of just about everything.
Email: kmccord@ksl.com
