Kentuckians are feeling the impact of inflation and its associated rising costs, particularly in the areas of food and gas prices.
Dr. Will Snell, a professor in the College of Agriculture, Food and Environment at the University of Kentucky, testified to the Interim Joint Committee on Agriculture Thursday to talk about the issue in Kentucky.
“Inflation is measured, as most of you all know, by the Consumer Price Index,” Snell said. “What you may not know is CPI is actually a basket of market goods that certainly includes things such as food prices in cars and the price of gasoline. But it’s actually a gauge of 80,000 different goods and services.”
The arithmetic involving inflation and CPI is quite complicated and isn’t due to one thing – it’s a combination, according to Snell. The things that affect inflation include government spending, labor supply issues, supply chain disruptions, monetary policy, weather/disease events, and the war in Ukraine.
“The past couple of decades or so, we have not had much inflation,” Snell said. “I tell my students pretty much throughout their entire lifetime, they’ve not experienced much inflation.”
Inflation hit a 40-year high in April when it rose to 8.5 percent. In the early 1980s, inflation hit 15 percent.
Food prices now are up 10.8 percent over the past 12 months, the most significant 12-month increase since November of 1980. The largest increase occurred in meat, poultry, fish, and eggs, which increased 14.3 percent, the largest 12-month percentage increase since a 19.5-percent increase in May 1979. Fruits and vegetables increased 7.8 percent, while other food items increased around 11 percent.Â
In February, Gov. Andy Beshear signed an executive order that halted vehicle tax increases for the next two years. He also announced a plan to introduce legislation that would cut the sales tax in Kentucky from six to five percent, but it wouldn’t take effect until July.
“We are here today to address something that has impacted every Kentucky family and small business – the rising prices due to inflation,” Beshear said at the time. “While the challenge is temporary, it has now reached a 40-year-high, directly due to the effect of a once-in-every-hundred-year pandemic.” Â
Last week, Beshear filed an emergency regulation to freeze the state gas tax and prevent a 2-cent increase per gallon that would have taken effect July 1.
“Kentuckians cannot afford to pay more, and I am committed to doing everything I can to help keep more dollars in people’s pockets,” Beshear said. “This law was never intended to hurt Kentuckians during tough times, but with rising prices and inflation, this increase would have a negative impact on our families, and it is time to take action.”
But the move is relatively symbolic as gas prices continue to soar. The average cost of a gallon of gas in Kentucky is $4.79, while the national average is $4.97, according to AAA.
“At two cents a gallon, this provides little relief to Kentuckians paying almost twice as much at the pump as they did last year,” said Speaker of the House David Osborne in a statement last week. “While the skyrocketing cost is the obvious and inevitable result of disastrous foreign and domestic policies on the federal level, President Biden seems unwilling to provide meaningful solutions to the impact inflation is having on the cost of living for the average person and the Governor’s only response seems to be to ask him to print more money.”
The latest CPI Data from the Bureau of Labor Statistics will be released on Friday.
“With increases in fuel prices we’ve seen over the past month and continued high food prices, and rental rates, interest rates … it’s going to be hard to envision inflation coming down from the levels we had last month,” Snell said.