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Featuring

Meghan Pinchuk, Chief Investment Officer and Partner, Morton Wealth

Chris Galeski, Wealth Advisor and Partner, Morton Wealth

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Grocery bills are roughly 25 percent higher than they were a few years ago, and they are not coming back down. That is not a prediction. It is how inflation works. The spike you felt in 2022 and 2023 set a new floor. From here, prices continue rising, just hopefully more slowly.

In this episode of Financial Commute, Chief Investment Officer Meghan Pinchuk and Wealth Advisor Chris Galeski answer the questions everyone is asking: why prices are not going back down, what a K-shaped economy means for households at different income levels, and what investors can do to make sure their assets keep pace with rising costs.

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Key Takeaways

• Inflation is a growth rate, not a price level. Prices do not go back down when inflation moderates. When the inflation rate falls from 9 percent to 3 percent, prices are still rising, just more slowly. The elevated prices from the 2022 to 2023 spike represent a permanent new floor. Deflation, where prices actually fall, is rare and typically tied to serious economic downturns. For groceries specifically, a meaningful price decline is not expected.

• Grocery prices are about 25 percent higher today than they were before the recent inflationary period. The spike was driven not by grocery store profit margins, but by rising input costs across the supply chain: labor, commodities, raw materials, energy, and transportation. Those input costs are structural and largely remain elevated. Grocery stores raised prices to protect already thin margins, not to profit from inflation.

• The K-shaped economy means inflation hits differently depending on whether you own assets. People who own homes, stocks, and other real assets have seen those assets appreciate significantly over the same period that prices rose. The inflation that stings at the checkout counter is partially offset by gains in their net worth. For people who do not own assets and are renting or carrying credit card debt, the picture is the opposite: costs went up, savings rates dropped, and credit card balances have grown roughly 50 percent since 2020, from $800 billion to approximately $1.24 trillion.

• Roughly 40 percent of inflation is tied to housing costs. People who locked in a low-rate mortgage in 2020 or 2021 are largely insulated from that component. People who are renting or trying to buy into the current market are absorbing both the housing inflation and the grocery and healthcare inflation simultaneously.

• Owning real assets is the most reliable long-term hedge against inflation. An ounce of gold cost $20 in the early 1900s and could buy a fine suit. Today it is worth around $4,100 to $4,200 and can still buy a fine suit. A $20 bill from 1900 cannot. The principle extends beyond gold: stocks, real estate, commodities, and other real assets tend to appreciate alongside inflation over time in ways that cash savings cannot. For investors, this is not a new insight. It is the same rationale that makes inflation-aware portfolio construction essential in retirement planning.

Key Moments From This Episode

0:00 – Intro: grocery bills are 25% higher and prices aren't coming back down

0:59 – Welcome: tackling the most common questions around inflation and grocery costs

1:30 – Why your grandmother's "I remember when" complaints are finally making sense

2:33 – Why lower inflation doesn't mean lower prices

4:03 – Inflation is a new floor: what that means for your monthly budget

5:15 – Why flat screens got cheaper but groceries didn't

7:04 – The K-shaped economy: two very different experiences of inflation

9:00 – Gold, real assets, and keeping up with purchasing power over time

10:14 – Housing is 40% of inflation: how homeownership changed who got hurt most

11:19 – Credit card balances up 50% since 2020: what that tells us

13:10 – Can increasing supply fix grocery prices? Not exactly

15:18 – Closing take: own real assets, run inflation projections, and don't bet on prices dropping

Questions This Episode Answers

Why are grocery prices so high?

Grocery prices are roughly 25 percent higher today than they were before the recent inflationary period. The increase was driven by rising costs across the entire supply chain: labor became more expensive, commodity prices rose, energy and transportation costs increased, and the raw materials that go into food production all became more expensive simultaneously. Grocery stores, which operate on thin margins, passed those costs along to consumers. The price increases were not primarily driven by record profits at grocery chains.

Will grocery prices come back down?

Unlikely, absent a significant economic downturn. Inflation is a growth rate, meaning prices rise at a certain percentage each year. When the inflation rate moderates from 9 percent to 3 percent, prices are still going up, just more slowly. The prices consumers paid at the peak of the 2022 to 2023 inflation spike represent a new floor. Deflation, where prices actually fall, is historically rare for consumer staples and is typically associated with recessions or depressions. Meghan's direct answer: do not expect prices to go back down.

What is a K-shaped economy?

A K-shaped economy is one where economic growth benefits one segment of the population while another segment experiences stagnation or decline. The shape of the letter K illustrates this: one arm moves up and another moves down from the same starting point. In the current environment, the dividing line is largely asset ownership. People who own stocks, real estate, and other appreciating assets have seen their net worth grow even as daily costs rose. People who do not own assets and are renting, or who are carrying high-interest debt, have faced rising costs without the offsetting benefit of rising asset values.

Why hasn't inflation hurt everyone equally?

Two factors create significant differences in how inflation is experienced. First, housing: roughly 40 percent of the inflation index is tied to housing costs. People who locked in a low fixed-rate mortgage in 2020 or 2021 are largely insulated from that component. Renters and prospective buyers are absorbing it fully. Second, asset ownership: stocks and real estate have appreciated significantly over the same period that consumer prices rose. A household with meaningful investment assets saw those assets grow, at least partially offsetting the higher cost of groceries and gas. A household without investment assets has no such offset.

What should investors do to protect against inflation?

The core principle Meghan and Chris discuss is owning real assets: things that tend to appreciate alongside inflation rather than depreciating in real terms. Stocks in companies with pricing power, real estate, commodities, and inflation-sensitive alternatives are all examples. The gold-versus-dollar comparison in the episode illustrates this: an ounce of gold cost $20 in the early 1900s, could buy a fine suit then, and at today's price of roughly $4,100 to $4,200 can still buy a fine suit. A $20 bill from 1900 cannot. From a financial planning standpoint, Morton Wealth builds inflation assumptions into retirement projections, meaning if a client is spending $200,000 a year in retirement today, the plan assumes that same lifestyle will cost meaningfully more in ten or fifteen years and sizes assets accordingly.

Why are credit card balances rising?

Consumer credit card balances have grown roughly 50 percent since 2020, from approximately $800 billion to around $1.24 trillion. The primary driver is that for households without assets or savings buffers, higher prices for essential goods left no choice but to borrow. When groceries, gas, and healthcare all become significantly more expensive simultaneously, households that were already spending close to their income have to either cut consumption sharply or carry debt to maintain basic living standards. Rising interest rates compounded the problem by making that debt more expensive to service.

Why This Matters for Anyone Who Has Noticed Their Grocery Bill Is Larger and Is Wondering Why

This episode does not require being an investor to be relevant. Anyone who shops for groceries, pays rent, or has noticed that the same lifestyle costs more than it did a few years ago will recognize the conversation. The economic forces driving higher prices are not temporary, and understanding why helps calibrate expectations, spending adjustments, and investment decisions going forward.

• Clients approaching retirement who need to understand how inflation affects the purchasing power of their savings and how Morton Wealth accounts for it in financial projections
• Anyone who has been wondering why grocery prices have not come down despite news reports that inflation is moderating, and wants a plain-language explanation of why moderation is not the same as reversal

At Morton Wealth, inflation is one of the central assumptions built into every retirement projection we run. If you want to understand how your current asset base holds up against rising costs over a 20 or 30-year retirement horizon, that is exactly the kind of projection we can build for you.

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