If your summer plans include travel this year, beware of sticker shock.
The national average price for a gallon of regular gas is $3.13 according to AAA’s national gas tracker. That’s a whopping 44% increase from last summer and a 7-year high.
However, we’re not just talking about the high price of gas either.
Hotel room prices have risen 44% since the end of June compared to last year, according to research company STR.
Need a rental car? Look for an even bigger price jump.
One recent weekend in Orlando, 18 of the state’s 20 major airports were out of cars, according to Jonathon Weinberg, CEO of AutoSlash.
“We’re looking at rates of $500 a day in some places,” Weinberg told CNN. “Last spring, we were seeing $5 a day rentals in Hawaii. You’d never seen that. (Over spring break) You’d kill for a car for $300 a day.”
The May Consumer Price Index reported that auto rentals were up 110% from last year and 70% higher than pre-pandemic levels.
Rental car companies sold off nearly a third of their fleet to stay afloat as consumers stopped traveling last year amid the COVID pandemic. Now, they are trying to quickly rebuild their fleet. For many travelers, it’s not happening quickly enough.
To make things worse, a widespread microchip shortage has slowed down production lines and supply chains. This means fewer cars coming off the assembly lines. Vehicle production in Q1 2021 was down nearly 5% from a year ago despite shutdowns at this time last year due to COVID.
That won’t help rental companies in their efforts to build fleets back up rapidly. Hertz and Enterprise, for example, say they have struggled to buy the new vehicles they want. There are reports that rental companies have had to turn to buying used vehicles at auction.
Airlines, which cut flight schedules and prices last year, are seeing a resurgence of bookings from vaccinated travelers. With fewer flight options and airlines trying to recoup some of the billions they lost during the pandemic, fares are dramatically higher than last year by 24%.
Still, fares remain lower than pre-pandemic levels in most cases, although popular routes and tourist destinations remain high.
When you arrive at your destination, you’re also likely to see price increases for just about everything. The government’s consumer price index jumped 5% from last year — the largest 12-month spike in inflation since 2008. The cost of feedstock for food and raw materials continues to rise.
Lumber, paper, steel, glass, and plastic are all more expensive than a year ago and, in many cases, higher than pre-pandemic levels. Prices for corn, grain, and soybeans are at the highest levels since 2012, according to the Associated Press.
Worker shortages and wage hikes may impact travelers as well. With so many businesses struggling to fill jobs, especially in the retail and restaurant industries, customer service is likely to suffer. Wage hikes mean many smaller businesses are raising prices.
The Federal Reserve’s survey of consumers from May shows that consumers are expecting increased prices. Respondents expect inflation to rise by 4% a year from now. That’s a new high and the highest level since 2013.