BOSCOBEL - When Lacy Dickman and Kyle Booher took a recent weekend getaway to Omaha, inflation took a big bite out of their budget. They paid more for gas, more for a hotel, and more for food than they had expected. 

And to make matters worse, the Boscobel couple struggled to find formula for their nearly eight-month-old infant. 

“They had the baby formula under lock and key,” said Dickman, who also has two older children. “When you can find formula, it’s rare and you’re limited. You can only buy three,” she said.

Back at home, they’re still worrying about their budget, as basic necessities like milk keep getting pricier. Milk has jumped on average, nearly 60 cents a gallon since the beginning of this year, according to the U.S. Department of Agriculture. 

 “You definitely feel it. It is more expensive, but you have to have it,” said Dickman, who considers their family lucky because both her and Booher have decent jobs. “You really have to plan ahead for things that you want to do.”

Worse in rural areas

The twin pressures of inflation and product shortages are hitting country-dwellers like Booher and Dickman especially hard. 

A recent analysis from Iowa State University Extension found that inflation had reduced rural people’s discretionary income—the portion of their paycheck left over after paying necessary expenses like gas and food—by a whopping 50 percent. In urban households, by contrast, inflation has reduced discretionary income by only 13 percent.

The study, authored by sociologist David J. Peters, blames several factors for the rural-urban disparity: For one thing, rural workers have less discretionary income in the first place, and inflation rates vary across regions and is higher in rural America. Most importantly, people in the country drive longer distances.

That’s especially true for Dickman and Booher, who drives from Boscobel to work in Gotham. 

“I just put $100 in at Gotham and it did not even get me three quarters of a tank,” Booher said. “When I bought my truck in 2019 it was $50 to fill it. Right before I got rid of it, it cost me $130 to fill it,” Dickman said.

Not just consumers

Boscobel’s business community is also struggling. 

“The hardest part for us is getting the product,” said Karl Krogen, president of Krogens Do it Best. “You try to sell someone household appliances and you can get the stove, dishwasher and microwave, but the refrigerator does not come for six months.”

Krogen belongs to a large co-op of small stores that buy the same products as big box stores. Krogen said that there are 4,400 other stores in the co-op, but their purchasing power isn’t always enough to stand up to supply chain issues. 

“I just received a six-foot glass top table and chair set with an umbrella for your yard,” Krogen said. “Summer is almost done. I ordered this in October, and I am just now getting it in. We would normally have this stuff out during the old Maxwell Street days. The patio furniture and all this sort of stuff would have been on discount. The people who want a picnic area in their back yard have already purchased that by now. It’s no longer an impulse item.”

The same thing happened with a lawn mower Krogen ordered back in October. The price went up by $400—a 10% increase, according to him. As a result, Krogen has to raise the retail price and hope his customers can afford it.

“My biggest fear is that I am going to buy all this product at inflated prices. I am paying more now for a lawn mower than they sold for last year,” he said. “Everything I buy is like buying a stock. I have to hope that I bought it right and that I can sell it right. Sometimes you take it in the shorts.” 

Like individual consumers, businesses are also impacted by rising gas prices. 

“We are consuming gasoline just like everyone else. We are consuming tires, gas, oil and oil changes. My gas bill is double for my delivery crew and service guys,” he said. “When it is $1,000 to $2,000 that is a lot to make up monthly.”

How did we get here?

Economists like Brian Peckham, an associate professor of economics at UW-Platteville, generally point to overlapping causes for rising prices. Increasing demand is one: Both during the lockdown, when stimulus checks were flowing from Washington, and as we open up, and participation in the labor market reaches epic highs. At the same time, the so-called supply chain has been disrupted by, for instance, factory shutdowns in China during the pandemic. 

Dr. Faye Peng, another economist at UW-Platteville said that the war in Ukraine also has been a cause for the rise in prices and lack of products as well as the supply shortages from COVID-19. 

“We used to be able to get supplies from overseas quite easily,” Peng said. “Now, we are not able to. When supply is low the price increases. The war has changed the supply of oil. Oil is a key component for all production of products. That makes the supply even less that pushes the price even higher.”

Recently, the Federal Reserve began raising the interest rate, which essentially makes it more expensive for banks to lend money. The theory is that if fewer people borrow and spend, demand will go down and with it, inflation. That strategy comes with the risk of causing a recession, said Peng.

Either way, as Peckham points out, the future for folks like you and me, are influenced by a wide variety of forces that are notoriously difficult to understand, much less predict. 

“The failure of the leading macroeconomists in the nation to give us accurate predictions of the severity of the current inflationary episode should serve as one more reminder of the very limited prophetic capacity of modern economists,” he said. “Our ability to understand the dynamics of an ever-changing economy is, I am afraid, quite meager.” 

In the meantime, like Dickman and Booher, we’ll all be required to adapt and in some cases, do without. Dickman recently decided to mix her baby formula with breast milk to stretch her supply.