Welcome to the 38th year of the Hanson Index, our annual snapshot of prices in the local Vermont economy. From an espresso at Leunig’s to a trip on the new Amtrak route from Burlington to New York City, our index provides a non-scientific yet insightful view of inflation trends.
Inflation rates in the United States have sharply declined since reaching their peak in the second half of 2022. However, certain prices are still pressing higher across some goods and, mostly, services. But the worst of the high inflation of the past three years seems to be behind us, giving Powell & Co. at the Fed comfort in penciling in interest rate cuts later this year.
So now that we are mostly through it—how did our local index fare versus the national average, CPI? Well, since we started the index, prices on the ground around Burlington have generally increased at a faster pace. That is true for all items except Leunig’s espresso, a bag of coffee beans, and dock space at Shelburne Shipyard. Good for you if you are an early-morning mariner, your dollar has gone far these many years!
When we look at the last three years since inflation really took off, local prices are looking pretty good, most of them below CPI. Notable exceptions are prices for babysitting and meals at Handy’s and Al’s. If you are a parent trying to go out for a meal, good luck.
Zooming in to the past year, the thing that stands out most is the number of prices that have not changed. And how about that massage? The price was totally unaffected by the 18% cumulative inflation since 2021. You might think with labor the main input to something like a massage, and wages experiencing strong growth, the price would go up. Huh.
What looks relatively smooth in a national inflation index can be anything but on the ground. Which raises the question: at what point does a local business decide rising costs need to be passed on to their customers? Sometimes it is volatility more than inflation that challenges businesses. For instance, the cost of a meal comprises various inputs such as potatoes, beef, frying oil, electricity, rent, and wages. If potato prices fluctuate from one month to the next, does the local restaurant change its menu each time? How can you tell if the price is going to go back down or if the increase is here to stay? It has got to be tough to navigate as a business owner and it is a good thing the roaring inflation of the past few years is mostly in the rearview mirror.
In a nutshell, the Hanson Index isn’t an exact numbers game—it’s a fun snapshot of how inflation shapes our day-to-day lives here in Vermont. While the pace of price hikes may have slowed, don’t hold your breath for a return to pre-pandemic prices anytime soon. So, why not treat yourself to that Ben & Jerry’s cone? After all, it’s still the same sweet deal as it was this time last year!
