Milk shelves at all three local grocery stores were empty this week due to a coronavirus outbreak and “a comedy of errors” at a major distributor’s warehouse in Centralia, Washington, according to Haines grocers.
“It’s the lowest our inventory has been in 20 years,” said Kevin Shove, manager of Howser’s IGA. “This week we actually don’t know where the milk went…As they say, it was lost in the black hole of Centralia.”
The Centralia warehouse, owned by worldwide grocery distributor United Natural Foods, Inc., shut down during the first week of August after more than a hundred employees tested positive for COVID-19. It reopened in phases and should be back to full capacity by next week, Shove said. “For three weeks we didn’t get a dry load.” But the milk issue isn’t related only to the coronavirus outbreak: trucking problems, a labor shortage and logistical errors at the warehouse have caused multiple delivery delays, according to Shove and IGA owner Mike Ward.
Milk was finally resupplied after a limited shipment on Tuesday, but stocks almost immediately fell again. “Everybody knew milk came in, and they were here buying it up by the armload,” Shove said.
Distribution should be back to normal soon, though. “We will have milk next week,” Shove said.
But there are still some kinks in the supply chain. A mix of factors, including production and labor shortages, rising demand and coronavirus outbreaks, has caused historic inflation across the nation and increased the costs of goods like groceries, gas and outdoor gear. “We’ve definitely been seeing (prices) creep up,” said Mary Jean Sebens, co-owner of Mountain Market. Meat costs in particular are rising, Sebens said. Sarah Swinton of Olerud’s Market Center also said she is starting to notice the effects of inflation, including rising meat prices.
Nationwide consumer prices in July surged by 5.4% from last year, the largest yearly increase since 2008. In urban Alaska, June prices this year were 6.2% above last year’s. There aren’t available consumer price data on Haines Borough or other small Alaskan communities, but “if we had measures for rural parts of Alaska, my guess is they would not be very different (from urban Alaska),” said economist Neal Fried at the Alaska Department of Labor and Workforce Statistics. The economic forces that influence the costs of most goods often affect all of Alaska and the U.S.
Production stopped during the pandemic as demand for oil and goods fell, said Nolan Klouda, executive director of the Center for Economic Development at the University of Alaska, Anchorage. As economies reopened this spring, there was a mismatch between slowed production and rising demand. Labor shortages, major weather events and transmission of the COVID-19 delta variant only compounded the effects.
“We’ve just been thrown so many surprises so far,” Fried said. “Most observers thought (inflation) would be a short-term thing.” While some prices have stabilized, like that of lumber, costs in general have continued to rise with no clear end in sight.
For example, statewide the average cost of a gallon of regular gasoline spiked 47% since last August, up to $3.70 from $2.52 a year ago. In Haines, that cost was as high as $4.49 this week. Energy costs have ripple effects on shipping and other industries. Sebens said Alaska Marine Lines this year upped its fuel surcharge — an expense tacked on shipping to compensate for fuel prices — from 6.5 percent to 10 percent. Still, the surcharge is “now about the same as it was in summer 2019, and still lower than where it was for most of 2018,” Alaska Marine Lines spokesperson Ryan Dixon wrote in an email to the CVN.
As prices rise, economists aren’t sure if the trend will last. Inflation would become a “really big problem” if it caused “a feedback loop between wages and goods,” Klouda said. That loop, causing runaway inflation, happens when employers raise wages to compensate for increased living costs and then increase prices to pay for the higher wages, and so on. But “we haven’t seen that type of thing starting yet,” Klouda said.
Doug Olerud, co-owner of Ole-rud’s Market Center and Alaska Sport Shop, said it’s a “constant balancing act” to keep wages matched with living costs. He said this year has been “one of the craziest” in terms of price increases — particularly on products like ammunition and gear made in China. He said he was told by distributors that the price changes were due to heightened costs of materials, shipping and COVID-mitigation protocols.
Fried, at the state Department of Labor, said a worry is if inflation lasts for more than two years and can no longer be explained by COVID-related issues. At this point, Fried said, it’s too early to tell what the long-term effects of supply shortages and rising costs will be. We’ll have to wait and see.