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Why Does This Stuff Cost So Much?

The price of nearly everything we buy has been rising—fast. Read on to find out why. 

iStockPhoto/Getty Images (Burger); Shutterstock.com (All Other Images)

Big Mac up 7%

Starbucks drinks up 20.4%

Clothing up 5%

Concert tickets up 45%

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In-app purchases up 25%

    Bryson Nowakowski wanted to buy a new baseball bat. He picked out a shiny red-and-white Easton one. It usually cost somewhere between $200 and $250. 

    For six months, Bryson, 11, saved his money. By last spring, he had almost enough.

    Then one day he looked up the bat online again. That’s when he got a big surprise.

    The price of the bat had jumped to $350. 

    “I was like, ‘What?’” recalls Bryson. “It used to be way cheaper. I was pretty mad.”

    Bryson Nowakowski wanted a new baseball bat. He picked out one made by Easton. It usually cost between $200 and $250.  

    For six months, Bryson, 11, saved his money. By last spring, he had almost enough.

    He looked up the bat online again. He got a big surprise. The price had jumped to $350. 

    “I was like, ‘What?’” says Bryson. “It used to be way cheaper. I was pretty mad.”

    Bryson Nowakowski wanted to buy a new baseball bat. He picked out a shiny red-and-white Easton one that usually cost somewhere between $200 and $250. 

    For six months, the 11-year-old saved his money. By last spring, he had almost enough.

    Then one day he looked up the bat online again—and got a big surprise.

    The price of the bat had jumped to $350. 

    “I was like, ‘What?’” recalls Bryson. “It used to be way cheaper. I was pretty mad.”

Rising Prices

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Chocolate up 11%

    Baseball bats aren’t the only things that are more expensive these days. A lot of stuff—from groceries to gas—costs more than it used to. What’s going on?

    When overall prices rise, it’s called inflation. It’s normal for prices to go up a little bit every year. For the last decade or so, they rose about 1 or 2 percent. But sometimes they spike in a short amount of time. In the first half of  2022, prices went up by about 8 percent. That is the biggest jump in 40 years. 

    Nobody likes high inflation. 

    It means you can’t buy as much with your money. 

    For example, $5 may have been enough to buy four candy bars last year. This year it may buy you only three. 

    A lot of stuff costs more than it used to. Groceries cost more. Gas costs more. What’s going on?

    When prices go up, it’s called inflation. It’s normal for prices to increase a little bit every year. For the last decade, they rose about 1 or 2 percent a year. But sometimes they spike in a short amount of time. In the first half of 2022, prices went up by about 8 percent. That is the biggest jump in 40 years. 

    No one likes high inflation. It means you can’t buy as much. 

    For example, $5 may have been enough to buy four candy bars last year. This year, it may buy you only three.   

    A lot of things are more expensive these days, not just baseball bats. Everything from groceries to gas costs more than it used to. What’s going on?

    When the price of almost everything rises, it’s called inflation. It’s normal for prices to increase a bit every year. For the last decade or so, they rose about 1 or 2 percent a year. Sometimes they spike in a short amount of time. In the first half of 2022, we experienced the biggest jump in 40 years when prices rose by about 8 percent.

    Nobody likes high inflation, because it means your money doesn’t go as far. 

    For example, last year, $5 may have been enough to purchase four candy bars. This year it may buy you only three.  

Pandemic Problems

    What has pushed prices up so quickly? It all started with the Covid-19 pandemic. Factories around the world shut down for months. They stopped making cars, computer chips, and other products. When factories reopened, they had trouble getting workers to come back. 

    At the same time, people were still buying new things. They wanted computers, exercise equipment, and furniture. As life got back to normal, they splurged on cars, clothing, and shoes. In 2021, people actually shopped more than they did before the pandemic. 

    Here’s the problem: Because of the factory shutdowns, there wasn’t enough stuff being made. Companies couldn’t meet the demand for their products. Anytime the demand is higher than the supply, prices go up.

    Why have prices gone up so quickly? It started with the Covid-19 pandemic. Factories around the world shut down for months. They stopped making cars and other products. Then the factories reopened. But they had trouble getting workers to come back. 

    At the same time, people were still buying things. They wanted computers. They wanted exercise equipment and furniture. As life got back to normal, they splurged on cars, clothing, and shoes. In 2021, people shopped more than they did before the pandemic. 

    Here’s the problem: Because of the factory shutdowns, there wasn’t enough stuff being made. Companies couldn’t meet the demand for their products. When the demand for a product is higher than the supply, prices go up.

    What has pushed prices up so quickly? It all started with the Covid-19 pandemic, which caused factories around the world to shut down for months. The production of cars, computer chips, and other products was halted. When those factories reopened, they faced difficulties in getting workers to come back. 

    At the same time, people were still buying new things, such as computers, exercise equipment, and furniture. As life returned to normal, they splurged on cars, clothing, and shoes. People actually shopped more in 2021 than they did before the pandemic. 

    Here’s the problem: Because of the factory shutdowns, there wasn’t enough stuff being made, and companies couldn’t meet the demand for their products. Anytime the demand is higher than the supply, prices rise.

Shutterstock.com 

Inflation case study

 

NIKE AIR FORCE 1S

 

Earlier this year, the price of Nike Air Force 1s climbed from $90 to $110. Why?

 

Factories Shut Down. During the Covid-19 pandemic, many of Nike’s factories closed for three months. This affected the supply of shoes available to stores and customers.

 

Supplies Cost More. Nike has to buy supplies like foam, plastic, and mesh fabric to make its shoes. Many of the factories making these items shut down too. This made the supplies harder to get and more expensive.

 

Shipping Is Expensive. Nike’s factories are mostly in Asia. Shipping shoes to the U.S. now costs more because of higher gas prices.

 

$$ All these extra costs get passed on to you!

The Price of Oil

Shutterstock.com 

Gas up 48.7%

    Another reason for inflation is the price of fuel. People cut back on driving and flying during the pandemic. So oil companies produced less oil. Now demand is up—and so is the price of gas. In June, gas was about $5 a gallon. That’s more than double what it cost in September 2020. 

    Everything made of plastic is partly made with oil. Oil is also in things like makeup, shoes, and smartphones. High oil prices make it more expensive for businesses to make their products. Companies also have to pay more to ship orders to stores or to your front door.

    Unfortunately, these extra costs get passed on to you.

    Another reason for inflation is the price of fuel. People drove less during the pandemic. They also flew less. So oil companies produced less oil. Now demand is up. And so is the price of gas. In June, gas was about $5 a gallon. It cost less than half that in September 2020. 

    Everything made of plastic is partly made with oil. Oil is also in things like makeup, shoes, and smartphones. When oil prices are high, it costs businesses more to make their products. Companies also have to pay more to ship orders to stores or to your home.

    These extra costs get passed on to you.

    The price of fuel is another reason for inflation. People cut back on driving and flew less during the pandemic, so oil companies produced less oil. But now demand is up—and so is the price of gas. In June, gas was about $5 a gallon, which is more than double what it cost in September 2020. 

    Everything made of plastic is partly made with oil. Oil is also in things like makeup, shoes, and smartphones. High oil prices make it more expensive for businesses to make their products. They also make it more costly for companies to ship orders to stores or to your front door.

    Unfortunately, these extra costs get passed on to you.

What’s ahead?

Groceries up 6.5 %

    Inflation hurts everyone. But it’s extra hard for families who don’t make a lot of money. They already spend most of their income on basic needs such as food, gas, and housing. The average U.S. family will spend about $5,200 more this year compared with last year—just to buy the exact same things. 

    The good news is that the U.S. government is taking steps to help lower inflation. Experts say that the amount of money people make will start to rise over time too.

    For now, many families are cutting back on spending. Your family may decide to switch to a cheaper grocery store. You may shop for secondhand clothing instead of buying new. 

    As for Bryson, he saved for the bat all summer. He even started mowing the lawn to earn more money. “I learned that you can’t always get what you want when you want it,” he says. 

    Inflation hurts everyone. But it’s extra hard for families that don’t make much money. They spend most of their income on food, gas, and housing. The average U.S. family will spend $5,200 more this year to buy the same things they bought last year. 

    But there’s good news. The U.S. government is working to help lower inflation. And experts say that people will get paid more over time.

    For now, many families are spending less. Your family may switch to a cheaper grocery store. You may shop for secondhand clothing instead of buying new. 

    As for Bryson, he saved for the bat all summer. He mowed the lawn to earn more money. “I learned that you can’t always get what you want when you want it,” he says. 

    Inflation hurts everyone, but it’s hardest on families who don’t have a lot of money. They already spend most of their income on basic needs such as food, gasoline, and housing. This year, the average U.S. family will spend an extra $5,200 compared with last year—just to buy the exact same things.  

    The good news is that the U.S. government is taking steps to help lower inflation. In addition, experts say that the amount of money people earn will begin to rise over time.

    But for now, many families have reduced their spending. Your family may decide to switch to a grocery store that’s less expensive. You may shop for secondhand clothing rather than buying new. 

    As for Bryson, he continued saving up for the bat all summer. To earn more money to save, he even started mowing the lawn. “I learned that you can’t always get what you want when you want it,” he explains. 

 

ACTIVITY: 
5 Questions About
Inflation

 

What to do: Answer the questions below. Use full sentences. Write them on a separate sheet of paper.

What to do: Answer the questions below. Use full sentences. Write them on a separate sheet of paper.

What to do: Answer the questions below. Use full sentences. Write them on a separate sheet of paper.

What is inflation?

What is inflation?

What is inflation?

When did prices start to rise very quickly?

When did prices start to rise very quickly?

When did prices start to rise very quickly?

How does the demand for a product affect its price? 

How does the demand for a product affect its price? 

How does the demand for a product affect its price? 

Why does it cost so much to ship items right now?

Why does it cost so much to ship items right now?

Why does it cost so much to ship items right now?

Who is most affected by inflation?

Who is most affected by inflation?

Who is most affected by inflation?

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