How Inflation Could Affect Student Finances

Historic inflation has affected markets across the country, and ASU students could see even higher prices on products, and potentially tuition, as a result.

Global supply chain shortages combined with increased demand have driven prices up.

Demand for basic goods and other assets has increased as consumers emerge from a pandemic-induced spending slump, according to Daniel Marburger, a clinician in economics. professor at ASU.

“As consumers, we’re bogged down and there’s huge pent-up demand,” Marburger said. “Because all the people who would have bought a house but didn’t, and now they’re all buying at the same time. And that’s true for so many things.”

In December 2020, the national annual inflation rate was 7%, the highest since 1982, according to Trade economy. In the Phoenix area in December, prices for all consumer goods and services rose 9.7% on average over a 12-month period, according to the BLS.

During this period, the price of meat, poultry, fish and eggs increased by 14.5%. Energy prices have seen a sharp increase of 40% over the same period, mainly due to the cost of gasoline, according to the BLS.

Supply chain issues have also contributed to a lack of supply, further driving up prices.

ASU establishes contracts with its suppliers that allow for small price increases in extreme market conditions. So far, none of the University’s suppliers have shown serious financial impacts that could increase University spending, said Jamon Hill, ASU’s assistant vice president of supply chain. , in an email.

However, if the University were to spend more on staff salaries and supplies due to rising inflation, this could have an impact on tuition fees – but ASU would have to prove that its higher expenses justify a tuition increase to the Arizona Board of Regents who have the final say – Marburger said.

“Theoretically, when the University wants to get their tuition approved for the coming year, they could present data to the Board of Trustees saying, ‘Look, our costs have gone up. We’re going to have to raise tuition,” Marburger said.

Historically, tuition fees increase independently of inflation.

Between the 2008-2009 and 2018-2019 academic years, prices for undergraduate tuition, tuition, and room and board at public institutions in the United States increased by about 28%, according to the National Center for Education Statistics, against only a 19% increase. national inflation over the same period.

This year, inflation is not expected to impact ASU tuition, according to University spokesman Chris Fiscus.

For the 2021-22 school year, the Arizona Board of Regents, which approves tuition fees for public universities in Arizona, did not raise tuition fees. Tuition increases at the University have been on hold since 2020, in part due to the coronavirus pandemic.

Fast food prices rose 8% nationally over a 12-month period, according to the BLS. According to a National Restaurant Association survey in September 2021, 75% of restaurant owners said they were understaffed.

According to Marburger, health issues could explain why some restaurants remain understaffed, especially with the highly transmissible omicron variant.

While the University has so far been largely spared from supply shortages, other parts of Arizona, especially rural communities, have felt the pain of international supply chain issues.

Bashas has struggled to stock shelves due to supply shortages and a lack of staff at its Chandler distribution center, affecting all of the company’s stores, according to a statement from Bashas’ president sent to the Navajo Nation.

Labor shortages are partly responsible for the rise in prices. Production costs for employers rise as they raise wages to attract applicants, forcing companies to pass the costs on to the consumer, such as increased menu prices.

Marburger said that although the economic situation is now unpredictable, inflation is likely to subside eventually.

“I’m going to take my foot off the accelerator and then release the brakes. And that’s kind of what the Fed is saying, okay, we’re going to have inflation. We’re not going to put the brakes on because it could trigger a recession, but now we’re going to take our foot off the accelerator and consider putting our foot on the brake,” Marburger said.

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