7 Things That Are Getting More Expensive in 2021
It's not your imagination. In so many ways, life in the summer of 2021 is a lot more expensive than it was a year ago.
Prices for hotels and used cars are currently at record highs, while gas prices have crept up to levels not seen in years, and the cost of services like Airbnb and Uber are soaring.
It's not just inflation that's causing prices to rise in so many areas of the economy, though inflation is at above-average levels. Changing business models, in addition to dramatically heightened demand in a world that's increasingly vaccinated and opened up, also explain why prices are up.
Here are some of the goods and services you're very likely to be paying more for in 2021:
As of July 22, the national average for a gallon of regular gasoline was $3.15, per AAA data. That's actually a decrease of two cents over the previous four days, but overall gas prices remain much higher than they were last year at this time — when demand was low during the heyday of the pandemic, and a gallon of regular cost $2.19, on average.
"AAA expects the national average to remain above $3 per gallon throughout the summer," the agency said in a release.
The last time gas was consistently average over $3 a gallon in the U.S. was 2014, according to the U.S. Energy Information Administration.
Prices for used cars and trucks in June were up 10.5% compared to May, and up an astonishing 45% year over year, according to the latest Consumer Price Index report from the Bureau of Labor Statistics (BLS). The rise in used car prices "accounted for more than one-third of the seasonally adjusted all items increase," the BLS report stated.
What does this mean in dollars and cents? According to Kelley Blue Book, the average list price for a used car in June was $24,414. That's an all-time high, and an increase of nearly $2,000 over the previous month — which was when the previous record high was set.
Beyond the burden that rising car prices places on interested buyers, there's a potential complication for drivers who total their vehicles in accidents. As Money reported, "those high price tags aren’t being used when insurers calculate the offers they make to car owners when cars are declared a total loss." In other words, if your car is ruined in an accident, the auto insurer may pay out much less than what it would cost to get a replacement in today's market.
Uber and Lyft
Ride prices from Uber and Lyft have been so expensive lately that people are turning back to taxis, in many cases. The research firm Rakuten Intelligence says that the cost of a ride was up 40% in April 2021 versus the same month in 2020, The New York Times reported. (Are you noticing a theme? Pretty much all methods of road transportation cost more in 2021.)
The price increases are generally attributed to a massive shortage of drivers. And the reasons why fewer drivers are willing to hit the road for Uber and Lyft include concerns about COVID-19, more competition from services like Instacart and DoorDash and generous government unemployment benefits, according to The Rideshare Guy blog. Many drivers have also complained about stubbornly low pay from Uber and Lyft, even as these services jack up prices on riders.
Menu prices at U.S. restaurants are rising "at a much faster pace than historical rates," Bloomberg reported recently. Prices were up 4% in May 2021 compared to the same month in 2020. The last time restaurant prices increased so steeply was 2009.
Among the major restaurant chains that have announced significant price increases in 2021 are Chipotle and Cracker Barrel. In general, you'll be paying more of a premium lately if you just go out for a quick bite at a casual spot. As the trade publication Restaurant Business pointed out, menu prices at limited-service restaurants were up 6.1% year over year in May, compared to a bump of 4.1% for full-service sit-down establishments.
Rising costs related to gas and employee pay are major contributors to why restaurant prices are on the rise. But another reason why prices are up at restaurants is that food itself is simply more expensive.
Data from the USDA indicates that prices for "food at home" (a.k.a. groceries) are expected to rise 2% to 3% this year, and this year's increases come on the heels of an above-average jump in 2020 of 3.5%. (The 20-year average is an annual increase of 2%.)
While meat saw the biggest price increases last year — beef was up nearly 10% in 2020 — this year it's fruits that are likely to cause sticker shock at the grocery store. Fresh fruit prices are up 5% so far this year.
Unfortunately, grocery shoppers should be expecting more price increases in the months ahead. As The Wall Street Journal reported, major food companies like Conagra, Mondelez, Hormel Foods, General Mills and Unilever are all in the process of slowly raising prices on a wide range of goods. As a result, everyday purchases like Oreo cookies, Lipton tea, Cheerios, Slim Jims and Skippy peanut butter have become more expensive in stores or will be subjected to price hikes soon.
Hotels and vacation rentals
It's no surprise that people are venturing further from home for vacations this summer. After all, a year ago, most of us remained cooped up in quarantine.
But it may come as an unpleasant surprise to see the extent to which this year's soaring demand for travel has resulted in sky-high prices for hotels and vacation rentals.
The average daily hotel rate in the U.S. hit just under $140 earlier this month, which is an all-time high, according to USA Today. Meanwhile, an analysis from the travel site Trips to Discover shows that average daily rates for vacation rentals from VRBO and Airbnb were up 23% in the first quarter of 2021, compared to the same period in the pre-pandemic days of 2019.
Beyond just the rising daily rates, many would-be travelers have been aggravated by ridiculously high cleaning and service fees attached to vacation rentals. "The cleaning and service fees are DOUBLING the advertised price of stays," one frustrated Reddit user posted.
The real estate boom is still very much underway in America, with homes routinely selling for over asking price and some owners listing properties at super high "make me move" prices just to see if anyone bites. Last month, the median existing home sale price was $363,300, up nearly 25% compared to June 2020 ($294,400), per the National Association of Realtors.
The fierce competition for homes is scaring off some buyers. But the silver lining is that mortgage rates are still hovering around record lows.
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