Inflation in Twin Cities hits 8.2%
ST. PAUL, Minn. (FOX 9) - Inflation hit 8.2 percent in the Twin Cities in March, the highest since 1982.
Food and fuel costs are driving price increases, though economists noted that Tuesday's numbers indicated that services inflation is also picking up. When inflation moves into the broader economy, it is harder for consumers to avoid higher prices.
Gas prices in the Twin Cities metro are up 41.5 percent year over year. Grocery prices have increased 7.3 percent. Companies are passing higher input costs from supply shortages and Russia's invasion of Ukraine onto their customers.
"Certainly every company right now is looking, how can I sell a price increase," said Joe Redden, a University of Minnesota marketing professor, in an interview. "Almost every company’s feeling that pain."
For groceries, consumers can try more store brands, check unit prices to find the best value, and consider shopping in store instead of online because it is easier to compare prices, Redden said.
In Minnesota, 2021 was just the second year in the past decade that inflation grew at a faster rate than wages, according to the state Department of Employment and Economic Development.
Inflation is squeezing household budgets and has become a key issue for voters, vexing policymakers who face political pressure but have little control over the prices that consumers see.
Biden loosens restrictions on E15 gas
President Joe Biden said Tuesday that his administration will allow summer sales of E15 gasoline this summer. The administration had previously announced plans to tap the U.S.'s strategic oil reserves.
The move will have small effects for some drivers at the pump because higher-ethanol gas is five to 10 cents cheaper than regular gas. It is banned during the summer months because of concerns about air pollution.
Minnesota Democrats praised the decision, a step they had been lobbying the U.S. Environmental Protection Agency to take.
"Making E15 available this summer is the right move," Gov. Tim Walz said in an emailed statement. "This month, we urged EPA Administrator Michael Regan to make E15 available to help bring down prices at the pump and give drivers more choices."
Gas prices have soared over the past year, with their steepest increases coming after Russia's invasion of Ukraine. In the past month, the price for a gallon of regular gas in the Twin Cities has fallen 12 cents, to $3.85. Industry analysts have said they expect high prices to continue for several months.
For several months last year, energy and durable goods - like used cars - drove inflation. Now, services and housing inflation has picked up, with rent prices up 4.4 percent year over year in the Twin Cities.
Stimulus at the Capitol
In response to inflation, Walz and Minnesota lawmakers have proposed a series of rebate checks, income tax cuts, tax credits and a gas tax holiday. The state has a $9.3 billion projected budget surplus.
All have cited high inflation as a motivation for the proposals. Key lawmakers denied that sending additional stimulus into the economy would further juice inflation, saying their proposals would provide more help than harm.
"I think it’s very important and very logical that you match the one-time rebate to one-time inflation to help offset costs that families and seniors and others have seen in this past year," House Taxes Chair Paul Marquart, DFL-Dilworth, said in an interview.
No consensus has developed around Walz's plan for a $500 direct payment to most adults. Republicans favor $8.3 billion of income tax cuts, while House Democrats have proposed $3 billion on tax credits for children, student loan payments and more.
"High inflation nis the problem facing Minnesotans in their wallets and pocketbooks. That’s why I believe doing a more in-depth, thoughtful approach here is the tax cuts," Senate Taxes Chair Carla Nelson, R-Rochester, said in an interview.