Ways for small communities to combat inflation

Economic conditions such as inflation can ravage entire local communities in various ways, often more severely than larger urban areas. The impacts can be long-term and devastating if not confronted head on and aggressively.

As prices rise, the buying power of local residents will decrease. This affects everything from groceries to housing costs, putting strain on household budgets.  Local businesses will face increased costs for supplies, utilities, and labor. They may struggle to maintain profit margins without raising prices, potentially losing customers.  Smaller communities tend to have a higher proportion of retirees or individuals on fixed incomes. Inflation erodes the value of their income, leading to financial distress.  Local governments face higher costs for services, materials, and employee wages, potentially leading to service cuts or tax increases.  As costs rise, consumers may reduce spending, leading to decreased economic activity and potential job losses in the community.

Since 2021, the U.S. combined inflation rate is just shy of 20% with a one year high reaching a 40-year high of 9.1% in June of 2022.  Rural areas often experience higher inflation rates. For example, a study by the Center for Rural PA found that rural counties experienced a 7.2% inflation rate compared to 5.4% in urban areas in 2021.  Food prices, a significant concern for small communities, increased by 11.4% from August 2021 to August 2022 as per the USDA.

So how can smaller local communities combat inflation.  They can promote local food production through community gardens, farmers markets and so forth. A great example comes from the UK where the town of Todmorden implemented an “Incredible Edible” program, growing food in public spaces, reducing food costs for residents.

They can implement local currencies or time banks. Local currencies keep money circulating within the community, supporting local businesses, the ultimate shop local program. Time banks allow residents to exchange services based on time rather than money. A great example comes from the BerkShares program in Massachusetts that has helped keep wealth within the local economy.

The local utilities can help in fostering greater energy independence. They can invest in renewable energy projects to reduce long-term energy costs. They can promote energy efficiency programs for homes and businesses.

What better time to support local businesses! Create “buy local” campaigns to keep money circulating in the community. Offer incentives for new local businesses, especially those filling community needs.  The AIBA reports that local businesses recirculate 48% of their revenue locally, compared to 14% for online or chain stores.

Small local communities can develop more affordable housing.  They can implement zoning changes to allow for more diverse housing options.  They can partner with non-profits or use community land trusts to create affordable housing.

Jobs and education are important, they can work with the local community colleges by offering free or low-cost classes in practical skills, financial literacy, and entrepreneurship.  Partner with nearby educational institutions for vocational training programs leading to higher-paying jobs and increased economic resilience.

They can create local investment opportunities by developing a community investment fund that allow residents to invest in local projects. This allows for funding for local initiatives while offering returns to community members.

A great example is the Nebraska Community Foundation which has helped rural communities raise over $500 million in charitable assets.

This is a great time to promote tourism and remote work. Develop unique local attractions to bring in outside revenue.

Create co-working spaces and promote high-speed internet to attract remote workers.  This can diversify the local economy and bring in new residents and income.

While small communities may face significant challenges from inflation, they also have unique advantages in terms of social cohesion, community engagement, and the ability to implement innovative local solutions. By leveraging these strengths and adopting a multi-faceted approach, small communities can build resilience against inflationary pressures and even thrive in challenging economic times.  The key to success lies in community involvement, creative problem-solving, and a willingness to adapt to changing economic realities. By focusing on local resources, fostering a strong sense of community, and implementing targeted strategies, small communities can not only weather inflationary storms but also build stronger, more sustainable local economies for the future.

John Newby is a nationally recognized Columnist, Speaker, & Publisher. He consults with Chambers, Communities, Business & Media. His “Building Main Street, not Wall Street,” column appears in 60+ newspapers and media outlets. As founder of Truly-Local, he assists chambers, communities, media, and businesses in creating synergies that build vibrant communities. He can be reached at: John@Truly-Local.org.