The informal third summer, when inflation will be circling like flies at a cookout, officially begins this Memorial Day weekend.
The summer of 2022 saw four-decade highs in inflation rates, but despite this, the forecast is still generally warm, which is unrelated to the weather. Most summertime-related experiences and purchases seem to be more expensive this year than they were last.
They suggested that might not apply to those who want to let off some fireworks, but it probably would for those organizing a cookout or setting aside money for air conditioning expenses in the upcoming months. Furthermore, gas prices this year may have already reached their peak if there aren’t any extreme weather events this summer.
According to Kayla Bruun, senior economist at Morning Consult, most individuals are feeling the effects of years of inflation at the moment these price rises are occurring.
Though households earning less than $50,000 were already trying to find bargains or shying from certain prices, Bruun said, the company’s polling data show a change since the start of 2024 for earners in the $50,000 to $100,000 range. Meanwhile, people making at least $100,000 aren’t slowing down as much, she added.
“The middle-income group seems to be feeling the strain of sustained, elevated costs of living. They are suddenly behaving more frugally,” Bruun said. “It’s looking like they are trending away from a willingness to splurge.
Does this holding off and trading down portend more of the same for the summer? Or are people saving up to spend more? It’s too soon to tell, but here’s a look at the prices they’ll be seeing for various summer essentials.
Groceries — including cookout staples
Memorial Day weekend starts the peak seasonal demand for meats, said Bernt Nelson, an economist with the American Farm Bureau Federation. “That’s our grilling season,” he noted.
But get ready to pay, as “meat prices are poised to go higher across the board,” according to Nelson.
Though chicken and pork prices may be fairly stable, beef is where the price action will be. Droughts in recent summers, higher cattle costs and a tightening of supply all push the final price higher going into the summer, he said.
People paid an average of $7.31 on all cuts of beef in the 52-week span ending in early May, according to numbers from NIQ, a market-research firm. That’s a 9.4% jump in unit price year over year.
For chicken, the average price was $3.31, marking a slim 0.6% decrease in price year over year.
As for summer crops, Nelson said inflationary pressures on produce prices are not as pronounced.
Some retailers are still reducing prices to hold on to consumers. Target Corp. TGT, +0.57% plans to shave prices through the summer for around 5,000 items, including sports drinks, frozen pizza, crackers and nuts. The budget grocery chain Aldi said it would cut prices on more than 250 items, including certain snacks, fruits and bread, through Labor Day, with its price cuts on steak and chicken running through July 10.
Gas
A gallon of gas averaged $3.61 nationally on Friday, a typical getaway day for Memorial Day travelers, according to AAA. Though summer tends to be the peak season for gas demand, early hints suggest a softening driven by a mix of inflation, improvements in fuel efficiency and growth in electric-vehicle sales.
There’s a chance prices might keep cruising around this mid-$3 price point, said Denton Cinquegrana, chief oil analyst at the Oil Price Information Service, a Dow Jones company. (MarketWatch is also published by Dow Jones.)
“If we don’t get any sort of extreme weather, we are looking at a situation where [gas prices] may have peaked already,” Cinquegrana said, noting that 2024’s average price was $3.66 around late April.
Of course, the chance of dodging extreme summer weather — like extended heat waves and hurricanes — is a major question mark, Cinquegrana noted. The Gulf Coast’s oil refineries get “tired” when they have to work in especially high heat for long periods, and hurricanes can disrupt gasoline supply coming out of the refineries, he said.
Here’s the problem: Weather forecasters are expecting heat waves and an active hurricane season. There’s an 85% chance of an “above-normal” hurricane season in the Atlantic Ocean, researchers at the National Oceanic and Atmospheric Administration’s National Weather Service said Thursday.
The summer is “going to feature heat waves from the Plains to the Northeast,” Tyler Roys, senior meteorologist at AccuWeather, told MarketWatch. While last summer was relatively quiet for the Gulf Coast, “this hurricane season, we kind of expect the opposite,” he said.
Utility bills
Turn on the air conditioner for that heat — but it will cost you, according to Mark Wolfe, executive director of the National Energy Assistance Directors Association. Last year, people spent an average of $661 on summer electricity costs, Wolfe noted.
“All signs point to higher electrical costs than last year,” he said.
At least the cheap cost of natural gas NG00, -5.54% — an important “feeder fuel” for electricity production — is helping tamp down the costs, Wolfe added. “That’s a bright spot, in a sense.”
But Americans now have to run their air conditioners for longer than they did in the past, as climate change creates longer and hotter summers. “Families now have to consider their electricity bills going up in June, July and August, and now September,” Wolfe said.
Sales and consumer-demand data on air conditioners, fans and air purifiers offer hints that people are gearing up for the heat. While sales revenue for these three products fell from 2022 to 2023, it is bouncing back so far in 2024, according to Circana, a consumer-research firm.
Grills and outdoor furniture
Grills and smoker sales are heating up too, Circana data show. Through April, sales revenue for grills and smokers was up 13%, while unit demand climbed 22% compared with the same point last year, the firm said.
The price has to be right before people go ahead with the purchase, said Marisa Ortega, an analyst at market-research firm Mintel who focuses on the U.S. retail and e-commerce space. Quality and style also count for grills and other mainstays of outdoor hangouts like patio furniture, she said.
“This summer, as inflation continues to impact purchasing power, consumers are still displaying cautious spending behaviors,” Ortega said.
“We’re seeing a shift towards more strategic financial decisions, with a decreased likelihood of impulsive purchases and an inclination to spend only when necessary, particularly for replacements,” she added, noting that brands are trying to highlight affordability in their pitch to shoppers.
Fireworks
Here’s a bright spot: “Consumer fireworks should still be affordable family fun, and pricing is down 5% to 10%,” said Julie Heckman, executive director of the American Pyrotechnics Association.
Essentially, all fireworks originate in China, so shipping costs are a key ingredient in the final price, according to Heckman. Since the pandemic’s supply-chain snags and rocketing freight rates, those rates have fallen.
The price declines will be apparent in larger-sized fireworks, which cost more to ship because of their weight, she said — with prices for these larger purchases ranging from $30 to around $100.
Fireworks are legal in 49 states and Washington, D.C., albeit with variations on allowable sizes and types, Heckman noted. Fireworks shoppers “will get more bang for their buck this year compared to last year,” she said.
