When inflation topped 9% over the summer, it made some of life’s basics, like gas and food, the most expensive they’ve been in 40 years. But there’s a surprising and remarkably accurate measure of how bad inflation may be, one you don’t hear as much about. Lisa Fletcher reports.
The following is a transcript of a report from "Full Measure with Sharyl Attkisson." Watch the video by clicking the link at the end of the page.
The cost of a haircut is going up. It's across the board and here to stay.
Luigi Parasmo has owned this salon for 11 years, raising prices only once until now. Inflation, forcing up the cost of some services by as much as $20.
Luigi Parasmo: It's just uncomfortable, but it needs to be done.
But the gravity of inflation is hard to escape.
Right now, the cost of a haircut in the U.S. is more than 6% higher than this time last year, the largest jump since 1982. Even with a steady stream of customers to count on, Parasmo says he's feeling the wrath of inflation.
Lisa Fletcher: Have you had a chance to look at the numbers since inflation really kicked in, in terms of how much more you're spending just to keep the salon open?
Luigi Parasmo: We're spending more, at least 15% more.
More for a tube of color, up 20%, gloves up 200%, and everything from hairdryers to cleaning supplies, noticeably more expensive.
While Parasmo says raising salon prices in response was unavoidable, he's decided to take a loss, rather than pass the entire cost on to his clients.
Lisa Fletcher: Do you feel like it's just sort of an adjustment you have to make to keep the business going?
Luigi Parasmo: Yes. Oh absolutely. We have to adapt ourselves to all these things if we want to keep the business alive, yes.
Stephen Cecchetti: Haircuts sort of encapsulate a bunch of parts of what's going on in an economy.
Steve Cecchetti is an economist who tracked inflation for the White House in the 1970s, under the Carter administration, and directed research for the Federal Reserve.
Stephen Cecchetti: Haircuts are really interesting because unlike a lot of things that we do, you can't move them around. With a haircut, I've got to actually go there, and somebody's got to have a pair of scissors, and they've got to cut my hair. So the price of haircuts is really something that helps me understand relative prices around the world.
For many, talk of inflation evokes images of the fuel shortages and endless gas lines of the 1970s. Cecchetti says what we’re seeing is really more closely related to inflation of the 1960s.
Stephen Cecchetti: Inflation went from 2% to 5% or 6%, so, a lot like what we're seeing now, and a lot of it came because of fiscal stimulus. And that drove inflation up in a lot of the same ways that a lot of the pandemic spending has done this time.
Just down the road from the salon, in the heart of D.C., Dale Simmons runs Walls Barber Shop.
Dale Simmons: Year after year, we've been just trying to keep people looking good in the neighborhood!
Where the price of a cut went from $35 to $40, as inflation threatened to shave his profits.
Lisa Fletcher: How did your clients take it?
Dale Simmons: A lot of them understand. It's getting expensive for everybody. You add like $10 or $20 to your everyday routine, it adds up.
But that’s the reality, which economists say could last another 5 to 10 years.
Dale Simmons: It is hard when you're raising prices, but when all the expenses and everything's going up around you, you got to keep up with the pace of the world.
No matter how you cut it.
For Full Measure, I’m Lisa Fletcher in Washington, D.C.
Watch story here.
The insidious part is that demand is eroding. People who went every 4 weeks will now go every 6. Getting color? Maybe stretch it out, do it yourself, or go natural. In order to stay in business with lighter customer base, salons and shops will have to increase prices again. Rinse and repeat.
Sharyl, I can see this leading to property confiscation by proxy. Meaning, that as taxes go up and rents go up and profits go down, our "saviors" in Big Gov't,/Business will simply 'forgive' debts if allowed to fold real estate and business into their portfolio.
Completely agree. They want entrepreneurs to go away.