OPINION:
The latest inflation numbers will no doubt have the talking heads on TV chattering for days to come. But lost in the inevitable noise and fanfare of political gamesmanship will be the true cost of inflation — the suffering heaped needlessly upon hardworking Americans across the country.
There are two things everyone needs to remember about inflation. The first is that this inflation crisis isn’t an accident — it is the result of bad economic policies and reckless spending in Washington. The second thing is that inflation itself is a cruel hidden future tax on working people and small businesses with limited incomes, because it devalues the dollar, driving up prices and driving down their buying power. Instead of taxing us honestly, the elites in Washington use a head-fake by spending recklessly and placing the burden on the taxpayers through eternal debt obligations.
Unfortunately, if this week’s consumer price index report is any indicator, inflation shows no sign of easing anytime soon. Despite dipping in December, inflation rose by 0.5% in January and was up 6.4% over the previous year. Inflation also hit every key sector in January, with shelter costs up 7.9%, energy costs up 8.7%, and food costs up over 10% from a year ago.
While these numbers are startling, a clearer picture of the financial pain being pointlessly inflicted upon working Americans can be seen by looking at the shocking price increases of common household goods over the past couple of years. Take, for example, the ingredients of a typical breakfast.
In January 2021, when President Biden assumed office, the average cost of a dozen large grade A eggs was $1.46, but by January 2023 it had more than tripled to $4.82. The average cost per pound of sliced bacon in January 2021 was $5.83 — rising to $6.80 in January 2023. The average cost of a pound of ground roast coffee rose from $4.59 in January 2021 to $6.35 in January 2023.
What this means is that real wages have declined for 22 consecutive months, a perilous downward trend for working Americans as consumer prices rise faster than do workers’ paychecks. Think about it: An individual’s buying power and the value of the dollar going down would be bad enough on their own — but this is occurring in a climate where people are making lower real earnings.
Small businesses are facing similar struggles. For example, Papa John’s franchisees are facing rising costs across the board. According to the latest producer price index report, the cost of tomato sauce had increased in January 2023 by a whopping 19.6% over the previous year, the cost of wheat-based flour was up by over 9%, and the price of low-fat natural cheese shipped in packages of more than 3 pounds (the volume a pizza-making business would need) was up nearly 10%. And of course there’s the increase in energy costs — not only are the costs of ingredients going up, but it’s getting more and more expensive just to keep the lights and ovens on every day.
Inflation has created a serious cost issue for Papa John’s franchisees. In fact, Papa John’s store unit economics are probably in worse shape than they’ve been in decades. When we stopped running the company on a day-to-day basis in 2016, the average customer ticket was about $20. Today, the average ticket is approximately $30. These inflationary price increases have unsurprisingly resulted in a loss of customer transactions.
Coupled with a quality-of-service issue brought on by a recent labor shortage, Papa John’s franchisees and indeed small-business owners in the food preparation industry across the board are facing their most perilous economic climate in decades.
Whether it’s an hourly employee trying to get by or a small-business owner trying to stay afloat, inflation is crushing Americans across the country. It’s a wrecking ball destroying the economy and damaging the foundations of the American dream. Increasing inflation means increased human suffering in our own backyard.
Americans desperately need relief from inflation, and they need it now. America works best when Americans work. Our elected leaders must stop spending money our country doesn’t have, prioritize cutting taxes, ease regulations, and adhere to fundamentally sound economic policies. If we can get those things done, we can ensure the American dream remains achievable in the near term and for future generations.
• John Schnatter is the founder and former chairman and CEO of Papa John’s International.
