Getting used to price increases isn't easy

Christopher Blackington has been in the market for an air fryer for a year.

“I just haven’t been able to pull the trigger on it because none of it seems reasonable,” he said.

The options feel endless. There’s everything from a basic $50 basket to $1,000 oven. At this point, he’s not even sure how much a good air fryer should cost.

“There’s just so many different brands. And then even when you get into those, there’s six different options within that brand,” he said. “And it’s like I don’t know what I need. Do I need that digital doodad?”

Whether it’s a pound of coffee beans, concert tickets to see a favorite artist or lunch at a fast-casual chain, sticker shock is real these days. The consumer price index is up about 25% since the beginning of 2020.

Still, wages have risen enough that they’re actually outpacing inflation. It means generally speaking, Americans are finally making enough money to keep up with rising prices. But that doesn’t mean getting used to them is easy.

Part of the problem, according to economists, is it’s getting harder to understand how much goods cost. Consumers have actually gotten worse at guessing prices. And there’s a long running, albeit unconventional, dataset to prove it: “The Price is Right,” the guessing game show that’s been on TV since 1972.

“You know, it’s one of those game shows that I watched probably more than most other shows growing up,” said Jon Hartley, a fellow at the Hoover Institution and a “The Price is Right” enthusiast.

He scraped 50 years of the show’s transcripts for the contestants’ guesses and the game’s correct answers, and he found some patterns. One is that over time, people starting getting worse at guessing prices. Contestants have increasingly underestimated the cost of items, a pattern that really took off in the ‘90s, around the same time online shopping became a thing.

“The internet creates so much variety that it’s impossible,” said Jean-Pierre Dubé, who teaches pricing at the University of Chicago.

There’s the variety of offerings — think thousands of air fryers — and variety of prices. Retailers can now change them in real time, based on supply and demand or a consumer’s browsing history. And constant discounts have become the norm. 

“What does it mean when something is regularly priced at $10, but for like 45 weeks of the year it’s on sale for 40% off?” said Dubé.

Having little understanding of what prices are makes adjusting to them hard — all at a time when consumers are also super sensitive to inflation. Hartley said people were good at guessing prices on “The Price is Right” in the ‘70s and ‘80s, when inflation hit double digits.

“One thing you can take away from that is when you do have periods of high inflation, people become more attentive to prices,” he said.

It makes sense. When prices rise fast, people feel the pain of every dollar. In 2022, inflation peaked at over 9%.

“That hit people really hard,” said Heidi Shierholz, president of the Economic Policy Institute. Around 2021 and 2022, inflation rose nearly as much as it had during the 10 years before. “That was too fast for people to just adjust their expectations of how much things cost.”

Blackington is still adjusting. The 44-year-old lives in Maine with his wife and 2-year-old son. He said his salary as an assistant at a community college has kept up with inflation. But it doesn’t feel like it. 

“Like, there’s always something that comes up that puts you behind,” he said. “Most recently I lost my car keys.”

A new set, because they’re digital now, cost $1,000. It didn’t used to be that way when they were just regular metal keys.

“We’ve never been able to just kinda get ahead and stay ahead,” he said. “So even if we’re keeping up with inflation, it doesn’t matter. We need to get ahead of inflation just to feel safe.” 

The thing about life is as we grow older, and as we grow at work, we expect to grow financially. Treading water never feels good. And if you were under water before all this inflation kicked in, the price is never really going to be right.