Maine businesses and residents feel inflation’s bite

A government report last week confirmed what anyone who’s gone through a checkout line already knew: Inflation is back in a big way.

In January, consumer prices were up 7.5 percent from a year earlier, the steepest rise in four decades, the US Labor Department reported Thursday. Monthly inflation peaked around October and has been trending downward ever since, but prices remain way up from a year ago.

After being largely a nonfactor since the early 1980s, businesses and consumers have become reacquainted with the notion of weighing whether to purchase something now or wait until later, when the price will likely be even higher.

Richard Ruggiero, owner of Liberator Brewing Co. in Rockland, has watched as the prices for all his supplies have continued to increase. Because of the pandemic, sales at his fledgling business, while strong, aren’t enough to keep pace.

The small brewery isn’t able to buy in the same bulk quantities as larger companies and has struggled to find the needed supplies at prices it can afford, Ruggiero said.

For a large brewery, grain might be around 37 cents per pound, he said. For small operations like Liberator, it’s up to $1.30. And the price keeps rising.

In addition, the cost of necessary chemicals for the brewing process is up about 50 percent, Ruggiero said.

Energy and payroll costs have also gone up, limiting cash flow. That would be hard for any business, but Liberator, which opened in 2019, hadn’t yet become profitable when the pandemic hit. It has been a real challenge, he said.

Ruggiero increased his prices last year, from around $5.50 or $5.75 for a pint of beer to around $6 or $6.50. A specialty brew is now around $7. And the more inflation costs the consumer, the less they are going to buy, he said.

Nikaline Iacono, left, owner of Vessel and Vine, and Chelsea Macdonald work at the shop on Friday. Brianna Soukup/Staff Photographer

Ruggiero is hoping to expand his operation sometime in the next year and might contract with another, larger brewery that would be able to help him brew his beer for less money. His options are limited.

“You can’t double the price for your beer – nobody will buy it,” Ruggiero said.

PRICES UP EVERYWHERE

Main retail experts said they are worried about the impact inflation will have on the economy.

Curtis Picard, director of the Retail Association of Maine, said rising prices are impacting businesses across the board.

Labor costs have gone up, and it’s not just hourly pay that has increased, he said. Workers’ compensation rates and employee benefits also cost more. The costs of materials, supplies, electricity and fuel have risen, and many businesses say they have no choice but to increase consumer prices to try to cover those higher costs.

“If you’re looking at your costs going up in different areas, and maybe you’ve cut other areas as much as you can … the only (thing) you can do is to (raise) prices,” Picard said.

It’s too soon to know what will happen in the coming months, but Picard said he is worried about another massive headache for businesses to deal with.

“My sense is, although pandemic numbers are dropping and hopefully we’re headed toward better times, ultimately it just feels like the overall economy is on unsteady footing,” he said. “Between the pandemic, the supply chain and now inflation, it’s kind of all over the map.”

Inflation is an economywide problem, but much of the harm will fall on those already struggling to make ends meet, said Arthur Phillips, economic policy analyst at the Maine Center for Economic Policy.

“It’s not affecting families equally,” Phillips said.

Low- and fixed-income families are feeling the effects most acutely, he said, in part because price increases have been most heavily concentrated among everyday essentials.

“Heating oil, electricity, the cost of cars and transportation, the cost of groceries and housing … these are the basics that everyone needs and that already make up a significant portion of folks’ budgets,” he said.

Nikaline Iacono, owner of Vessel and Vine, tempers chocolate to make chocolate-covered strawberries on Friday. Inflation is at a 40-year high and her shop, a wine and specialty foods store, has seen a substantial price increase for products. Iacono has altered her business model since the start of the pandemic, switching from a bar to specialty foods, on-site dinners and classes. Brianna Soukup/Staff Photographer

Not all inflation is bad, Phillips noted, especially that which comes about from workers earning a living wage.

“There have been really long-overdue wage gains for folks at the lower end of the income ladder,” he said, “mostly focused on people who are doing some of the most demanding pandemic work (during the).

Phillips said he expects inflation to decline throughout the year if coronavirus cases continue to decline and people continue to get vaccinated and boosted, allowing the economy to regain strength.

But businesses and consumers will have to navigate some rough terrain before the economy regains more solid footing.

BUSINESS IMPACTS VARY

Elizabeth Moss, owner of Moss Galleries in Falmouth and Portland, said she’s had to nearly double the cost of some of her custom frames because the price of materials, particularly wood, has skyrocketed.

Supply chain issues also mean that materials take longer to arrive, dragging out the time needed to complete jobs. What used to take two or three weeks now takes four to six, she said.

Moss has had to increase her prices and even change her business model by partnering with another local framer to keep up. Without that, there would be no other way to make a profit, she said.

“It’s unfortunate because custom framing is becoming more of a luxury than it once was,” Moss said. “Presumably, when the price of wood goes down again, it will be more affordable.”

Nikaline Iacono, owner of Vessel and Vine in Brunswick, puts away wine at her shop on Friday. Iacono has altered her business model since the start of the pandemic, switching from a bar to a provider of specialty foods, on-site dinners and classes. Brianna Soukup/Staff Photographer

Nikaline Iacono, owner of wine and specialty foods store Vessel and Vine in Brunswick, said she has seen huge price increases for products and has had to adjust her store’s prices accordingly.

Iacono also has altered her business model since the start of the pandemic, switching from a bar to a provider of specialty foods, on-site dinners and classes.

But a few business owners said they have been able to avoid some inflationary cost increases.

Ari Gersen, owner of Longfellow Books in Portland, said his prices with publishers are fixed and, while the cost of books has been increasing over the past several years, there hasn’t been a dramatic increase since the start of the pandemic.

Labor costs have gone up, but Gersen said that has been more a result of “paying people what they are worth” rather than needing to pay overtime because of a staff shortage. The business’s worker retention has been strong, he said.

If Longfellow Books feels the sting from inflation, Gersen said, it will likely be from lower sales volume because customers have less money to spend.

TRYING NOT TO SPEND

Mainers out shopping in Greater Portland last week said they are keeping a wary eye on rising prices and being a little more careful about what they spend their money on.

Jeff Ohman of South Portland said he has paid higher prices on almost everything, but especially at the gas pump.

“Fuel is the one that really hurts,” he said.

Ohman said he has been trying harder to consolidate usage trips to keep his vehicle down.

Inflation is affecting more than just consumer goods, he said. Big bills such as property taxes have also increased over the past year and take a bigger bite out of his budget.

Nikaline Iacono, owner of Vessel and Vine, puts away wine at her shop on Friday. Brianna Soukup/Staff Photographer

Although he got a raise last year at Port Harbor Marine, where he works “almost full time,” Ohman said he tries to be more thoughtful about what he buys, to keep his costs as low as possible until prices stabilize.

Emily Davis of Portland said she senses prices are rising on a whole range of items, from her weekly grocery shopping to clothes and even sports equipment for her children.

“I’ve always been a thrifty shopper,” Davis said, “but now I’m buying on a tighter budget, and that’s difficult.”

Davis said she and her husband have talked about how it’s gotten much more difficult to save with the rising prices. It’s surprising just much more it costs now for even mundane items such as toilet paper and paper towels, she said.

Perhaps a silver lining is that buying reusable cleaning cloths might prove better for the environment than throwaway paper towels, Davis noted.

Mandy Scott of Old Orchard Beach said high food prices at the grocery store are what upset her most about the past year’s inflationary spiral.

Gasoline prices “have been up that high before,” and so they don’t alarm her as much as bigger weekly grocery bills, she said.

Scott said she’s normally more thrifty in the winter because she works at a Wells restaurant that is only open during the summer. This year, with prices rising, she is being especially mindful of what she buys.


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