Viral 2006 Walmart receipt highlights how sharply grocery prices have climbed

Added: 2026-05-30

[00:00:00]Good day, Chicago. A Walmart receipt from 2006 is going viral. 79 items purchased for the low low price of $161.

[00:00:10]And you know, it's really bringing the weight of inflation home because today that grocery bill would be closer to $400.

[00:00:17]Professor Steven Durlauf from the University of Chicago Harris School of Public Policy is here. Professor, thank you for joining us.

[00:00:25]>> Well, thank you for having me.

[00:00:26]>> So, how has the cost of items gotten so out of control? And how far behind are wages in keeping up with this?

[00:00:35]>> Well, the sources of the price increases, I think, are threefold.

[00:00:38]Number one, the overall effect of tariffs has been to raise prices. And you know, the best estimates are about 90% of the tariff uh increases have either been paid by consumers or by firms. The second issue, of course, is oil prices. And that's what we've had in the last several months.

[00:00:56]And the third is the economy is uh is heated. And what I mean by that is when you have uh reductions of taxes, increases in government spending, that also increases uh demand for goods. And all those combined, yeah, I don't want to call it a perfect storm, but they collectively are producing the uh the higher prices that you've seen.

[00:01:15]>> How have wages uh kept up with this? And is there potential that we could see them go up to maybe meet inflation?

[00:01:24]>> Well, so far they have not kept up. So, if you look at the year-to-year changes in uh inflation and wages, it's a slightly higher inflation rate than wages. So, I don't want to say I wouldn't say that they dramatically decreased in real terms, but they have they decreased slightly. I don't think that there's particularly good evidence right now that uh the labor markets are going to uh generate substantial wage increases.

[00:01:47]But one thing that's very important to say is these are extraordinarily uncertain times.

[00:01:52]And so, if you ask about uh the effects of the uh preliminary ceasefire in with Iran.

[00:01:58]The markets have really haven't responded very much. There's a slight increase in the Dow, slight decrease in in oil futures, etc. And so, I think it's against a background of great uncertainty that you're not going to see dramatic changes in uh in uh either uh prices or wages over the short horizon.

[00:02:16]>> Has there ever been a time in history, Professor, where we've seen inflation like this uh compared to what wages are?

[00:02:24]>> Oh, yes. I think that you could look at uh major inflationary episodes. Uh one example which will uh predate you, but dates me, would be the uh late 1970s, in which you had dramatic uh increases in inflation, again much more associated with oil prices. And then you had periods of inflation under COVID, which were quite dramatic. There the effect on wages is a little hard to calculate because so many people were withdrawn from the labor force. But I think the upshot is that uh what determines whether wages keep up are going to be the mechanisms that are that are underlying things. And so, without uh I would say dramatic changes in the uh way that the labor markets are trying to attract, you know, firms are trying to attract workers, there aren't good reasons to believe that there's going to be a a wage boom right now.

[00:03:09]>> What needs to happen so that these prices go down?

[00:03:14]>> Oh, I think going down may be a little too optimistic. And what what I mean by that is that let's let's suppose that uh the uh ceasefire holds and that the Strait of Hormuz opens. That's going to take two or three months. And so, certainly over that horizon you're still going to have the shortages.

[00:03:29]The second thing is that the uncertainty associated with oil has changed. In other words, what prices reflect are not only kind of what's around today, but the beliefs about whether uh the supply is going to be at a certain level in the future. And so, given that uncertainty, I think it is not very likely that you'll see dramatic decreases. The third thing is that uh if you look at the behavior of uh of individuals affected by oil price shocks. They did not fully you know increase prices in response. So you know gasoline station owners etc. Lost money and they're probably going to try to recoup it. And maybe the final thing to say is that changing prices of oil ripples through the entire economy.

[00:04:10]And what I mean by that is that one of the major issues is going to be transportation costs. And so one of the reasons food went up is that the cost of moving it around changed. And so that's going to stay high. You can go down the list half of the fertilizer that's produced by natural gas goes through the Strait of Hormuz. So there was 50% increases in various fertilizers.

[00:04:34]That means the prices of production went up for agriculture. That's now the cost they had to pay and that's going to even if uh uh you know since they've already done the planning etc. You're going to see that the prices of food are going to stay high because the input costs were high at the time that the purchases were made.

[00:04:50]>> Well, I want to jump off a cliff after hearing all of that news. So thanks so much for that. I I just it's a lot of gloom and doom but I mean I like to leave people on a positive note. Um is there anything we can do in our daily lives that you would suggest as an economist to um help us?

[00:05:07]>> Well, I'll say two things. One I know I I more doom and gloom was not the message I wanted to have. It was more that I think that there's not going to be a dramatic a dramatic change. In other words, prices are higher. There's not a good reason I think that you that they will continue to grow. In other words, this is these were kind of one-time shocks. So that's the first message.

[00:05:26]The second message is to actually to avoid doom and gloom. In other words, there's a tendency in these contexts to kind of engage in worst-case scenario thinking to assume the world's going to end. Uh happily that's not a very high probability event. And so I think there's a tendency by consumers to uh overestimate what what the situation is in terms of of of downward possibilities.

[00:05:48]>> Okay. All right. Well, we appreciate you trying to tamp down the doom and gloom.

[00:05:52]Thank you for joining us. You seem like a very nice man and I'm sure that I'd love to take you shopping one day just to kind of get your advice.

[00:06:00]>> [laughter] >> Thank you so much.

[00:06:03]>> Well, I would need your good taste for that. Thank you so much.

[00:06:05]>> All right. Thank you so much, Professor.