Sticky Prices

Everything has gone up in price these days; as the fuel-price rises, so does the cost of getting the things we buy to market. And retailers aren't going to foot the bill for that all by themselves; they raise the prices on the things we buy so they don't feel the pinch as much.

But what happens when the price of fuel drops, as it's done recently? We rejoice a little bit each time we go and fill up our cars and it costs less, but how about the prices for the things around us?

I just read this morning that UPS is introducing a 5.4% surcharge to cover their fuel bills and residential-delivery differential, starting January 1, 2009. Wait a minute. The price of shipping via UPS already went up when diesel fuel jacked up to over $4.00 per gallon! And now the price is coming down, so why the surcharge?

That's a sticky price. Grocery stores are full of them, too. Groceries tend to see the slowest price-increase when fuel costs go up (so much of it sits in local warehouses and doesn't make a large difference in the profit margin of a store), but once the prices do climb, they're up there for a while. When fuel prices decrease, the increased prices at the grocery store are the slowest to drop, as well.

So how to combat this? Short of growing all your own produce, home-canning, and avoiding the grocery store, I can't come up with any significant way. But that's also why I shop sales WITH coupons. Something at a good price gets procured in large quantities and stored in my pantry, but "good price" to me means "on sale, purchased with a doubled-coupon." So I hang on to coupons and purchase when the price drops.

No one knows what the future holds in terms of fuel prices and the economy. Chances are good that it will be hard for some time to come. But if you can plan ahead and build a decent pantry for lean times, you'll make it through with a little more grace and aplomb than otherwise.

And you'll survive the "sticky prices" that are everywhere.

~Sue