The high price of everything, explained
When I was growing up, my dad and I would play a game at the grocery store: As the cashier was ringing up the items on the list my mom had given us, we each would guess what we thought the total would amount to. Whoever was closest won bragging rights, and maybe if we were feeling indulgent, the candy bar of our choosing.
I’m shopping for just myself now, but I’m still pretty good at this game. That means I’m always paying attention to how prices change. What used to feed a family of three is now just enough to cover my own grocery bill, and those prices just keep going up. So what gives? Is this just regular-degular inflation? Or is something else driving up the price of the items we use day to day?
On the latest episode of Explain It to Me, Vox’s weekly call-in podcast, we look into three goods and why they cost so much right now: gas, coffee, and milk.
You can listen to the full episode on Apple Podcasts, Spotify, or wherever you get podcasts. If you’d like to submit a question, send an email to askvox@vox.com or call 1-800-618-8545.
Gas prices: The war with Iran and you
First up, a trip to the gas station. Sam Ori is the executive director of the University of Chicago’s Institute for Climate and Sustainable Growth, and he says the issue with oil right now is global. The war with Iran is choking the Strait of Hormuz, limiting the amount of oil available to the rest of the world.
“The price of gasoline that we pay at the pump is set in the global oil market,” he tells Vox. “Crude oil is like the feed stock that makes gasoline. More than half of the price that you’re paying at the pump is just directly the result of the price of crude oil in the global market.”
That price, plus federal and state taxes along with profit mean Americans are paying more to fill up their cars.
The United States is still the largest producer of oil in the world. But self-sufficiency isn’t really an option. “The United States still imports a lot of oil because the refineries that we have in this country are configured to refine a certain quality of crude oil,” Ori says. “It’s not easy to change the configuration of those refineries. The United States produces what’s called light, sweet crude oil. We still need a lot of heavier, sour crudes. So we import those and then we export the light oil.”
Coffee: A climate change story
Our next stop is your local cafe. Gone are the days of hand-wringing over millennials squandering their wealth on $5 lattes. Those lattes have easily crept up to $10.
Bloomberg reporter Ilena Peng says the price of coffee has been going up since early 2024, and we can blame that on the weather. Vietnam and Brazil are the world’s biggest coffee producers, and both have had dry weather recently. “The boogeyman is ultimately climate,” she says.
But tariffs also play a role here. Last year, President Donald Trump put a 50 percent tariff on Brazil, where most of the beans at your local coffee shop likely come from. Eventually, in November, coffee and other products were exempted from tariffs, and in February, the Supreme Court struck down Trump’s tariffs.
The exemption, Peng says, “helped roasters quite a bit with being able to plan, even though a lot of them are still dealing with leftover costs. You contract inventories months ahead.” That means there’s a major lag between that cost and the cost at the consumer level, so we may be paying a lot for those lattes for a while.
Milk: Small costs add up
What about the milk that goes in that coffee? Dairy prices are high right now too: The national average for a gallon of milk is $4.03. Charles Nicholson is an economics professor at Penn State University, where he teaches about supply chain management and food supply. He says the way we go about setting dairy prices gets a little complicated.
“Farms actually get paid on the basis of what the milk is used for,” he tells Vox. “So the highest value and the highest price that you would pay a farmer for milk is for milk that’s gonna go into that carton at the grocery store.”
Unlike with gas and coffee, it’s hard to point to any specific factor driving up the cost of milk. Instead, it’s a story of small price hikes all the way through the system: Other costs include the processors who put the milk into the cartons and food retailers. Transportation is a factor (remember those rising gas prices?), along with the care and feeding of livestock.
We may also see this price change outside that carton of milk too. If you’ve ordered a pizza recently, you’ve experienced where most of the milk in the United States goes. “Close to 40 percent of the milk that we produce goes into making cheeses of various kinds,” Nicholson says. “A lot of that is mozzarella cheese that would go on a pizza. And pizza restaurants can also play around a little bit with — how much cheese am I gonna put on that pizza?” That cheddar is costing some serious cheddar.