High gas, food prices affecting store deals

9:55 PM, Mar 31, 2011   |    comments
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  • High gas and food prices affecting store deals
  • High gas and food prices affecting store deals
    

GOLDEN VALLEY, Minn. -- It's only time before high gas prices affect deals at stores.

According to Twin Cities Gas Prices, a gallon of regular unleaded is up 14 cents from a week ago. It's up 90 cents from this time last year.

Wal-Mart CEO Bill Simon told USA Today that inflation is "going to be serious." He added, "Every single retailer has and is paying more for the items they sell, and retailers will be passing some of these costs along."

Wal-Mart slogan "Save Money, Live Better" may be compromised. Simon says he predicts prices to increase in June.

"If you start seeing people wearing bell-bottoms we're in for a wild ride," David Vang said.

Vang is Finance Department Chair at the University of St. Thomas. He's talking about the 1970s era, we're fading back into. 

"We're unfortunately entering into an area of stagflation, where you have inflation and unemployment at the same moment of time," Vang said. 

With national unemployment still around nine percent, and pay raises few and far between, the cost of gas and food continues to rise.

Vang says there's two reasons for that. First, the value of the U.S. dollar continues to fall compared with other countries -- while the U.S. expands its money supply.

"If Target and Walmart both get materials from China, and the exchange rate worsens for the U.S., they're
buying from vendors in the same boat. Higher prices for all," Vang said.

Second, transportation costs. Vang says Middle East turmoil is affecting it. He says Libya has potential to produce around three percent of the world's oil. And that's been shut down.

"A shift of 1-3 percent of the world's suppy is enough to affect prices substantially," Vang said.

Target released a statement Thursday: "Rising commodity costs are affecting all retailers, and Target will maintain its value."

(Copyright 2011 by KARE. All Rights Reserved.)

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