Trickle-Down Inflation

“Every vendor that delivers to my stores, their fuel charges are going up and they’re passing the costs along to us.”—Glen Rega, local supermarket owner, in ‘The Trickle-Down Costs of Higher Oil’ from the New York Times, August 21.

The price of oil is trickling down into the real world, and making itself felt to consumers and retailers and distributors alike in ways apparently not contemplated by the various price indices.

In a brief but information-packed story in the Connecticut section of the Sunday New York Times, real people who run real businesses talked about the impact of rising energy costs—some being borne by the business and some being passed on to the consumer.

And some appearing in the strangest places.

Mr. Rega said he just received notice of a price increase from his linen company, which cleans the aprons and smocks used by deli workers and cashiers. Too bad that linen company can’t fly the smocks and aprons to China or India to get them cleaned.

But it’s not just linens. It seems that a very large segment of the economy is not able to offset the cost squeeze by packing up and moving to Guangdong Province or Bangalore.

Rick Crays, for example, owns a flower shop in Fairfield and is “getting ready to make an adjustment” to cover the cost of delivering flowers (as many as 60 each day). The adjustment Rick is contemplating amounts to a 10 percent hike in the delivery charge.

Marty McCarthy, a pizza store owner, doesn’t have Rick’s delivery cost problem, because Marty’s pizza drivers pay for their own gas (how’s that for trickle-down inflation!).

However, the story notes:

[McCarthy] does have to deal with the rising costs of the ingredients, all of which are dropped off by truck. The reporter also talked to movers (the cost of diesel fuel) and home builders (the price of asphalt shingles) now raising prices to cover the rising cost of just doing their job every day.

Larry Buck, manager of Feinsod Hardware…feels the pinch of higher fuel costs every time he looks out the door to the store and sees, on the sidewalk, a garbage-can shed for sale. The wholesale price on it went up $27 recently, an increase of more than 10 percent… Sounds like the “trickle-down” cost of energy has become a flood.

Jeff Matthews I Am Not Making This Up