By Romeo Agbalog, Executive Director, Kern County Farm Bureau
In 1878 Frank W. Woolworth came up with a concept to create a merchandise store stocked with only five cent items.
After a rough start Woolworth finally experienced success and formally incorporated F. W. Woolworth & Company in February of 1905 about 117 years ago today. Woolworths’ success led to the addition of ten cent merchandise and eventually an expansion of stores across the United States, including internationally with stores in Cuba, England, Germany, Mexico, and South America.
The equivalent of a nickel back in 1905 in terms of purchasing power today is about $1.58. Between 1905 and now the dollar had an average inflation rate of 2.99% per year, producing a cumulative price increase of 3.058.50%, meaning today’s prices are 31.58 times higher than average prices since 1905 according to the Bureau of Labor Statistics Consumer Price Index. Simply put, a dollar today only buys 3.16% of what it could buy back then. Now the current year-over-year inflation rate stands at 6.81%.
With inflation having risen to levels not seen in about four decades, joined by high input costs, labor shortages, supply chain disruption, and water are top concerns for agriculture. Although, inflation impacts everyone, especially the middle class and those on fixed incomes. Inflation poses a huge threat to the middle class since price increases reduce purchasing power and push the things that the middle class could previously afford further out of their reach.
The current Administration has tried to downplay the impact of inflation and even at times shift the blame onto the private sector, like blaming meat producers for the increased cost of ground beef or oil companies for higher gasoline prices. However, inflation is the direct result of bad government policy and interference. When government erodes the purchasing power of money, the result essentially amounts to that of a tax hike, except without voter input or approval.
So, when do things get better? Remember the days of double-digit inflation, double-digit interest rates, and negative economic growth of the Carter era? Some may argue we are there again. First, it will take strong, focused, and principled political leadership to help get us back on track, until then however, things could get even worse. Yet I remain optimistic that brighter times may lay ahead, but this is just a “nickel for my thoughts” assessment.