We all know the toll that inflation is taking on our everyday lives. We can see it at the gas pump, at the grocery store, and just about everywhere else we spend money.
Inflation has hit 7.5%, and we’ve just seen the largest one-month increase since 1982.
“Shortages of supplies and workers, heavy doses of federal aid, ultra-low interest rates and robust consumer spending combined to send inflation leaping in the past year,” the Associated Press explains. “And there are few signs that it will slow significantly anytime soon.”
And we now know just what kind of impact this level of inflation is making on American households. Ryan Sweet of Moody’s Analytics has estimated that the average U.S. household is paying $276 per month more than it did before inflation soared so high.
Sweet calculated what households pay for goods now compared to what they paid when inflation was at 2.1% in 2018 and 2019.
“It really hammers home the point of ‘what is the cost of inflation?’” said Sweet.
Bear in mind that this figure is an average. Families who have spent more money on products whose prices have increased more than 7.5% are taking a bigger hit. The Wall Street Journal gives the example of washing machine prices, which have risen 12.1% over 2021.
Wells Fargo and the U.S. Department of Labor measured the price increase of various categories of goods over the past year. (This study was released at the end of January, so it reflects a Consumer Price Index increase of 7% as opposed to 7.5%.)
There’s also some slight variation in the rates of inflation by income group. They’re small fluctuations, but the authors of the study note that even little differences can create big ripples in a household’s spending.
“Lower-income groups have fewer avenues to adjust to a broad increase in prices, such as falling back on savings, trading down in price, or forgoing more discretionary purchases,” they write. “What’s more, experienced inflation is likely higher than measured inflation for less well-off households, given the CPI’s approach to housing costs.” (emphasis in the original)
Similar to the fluctuation in inflation by income is the variance by race.
“The patterns of inflation by race and ethnicity bear similarities to those by income,” the authors point out. “Asians earn significantly more than the average American household and direct a relatively higher share of purchases toward categories that have seen more restrained price rises relative to the average, like education, food away from home and housing.”
Regardless of how you slice it, inflation is hitting all of us hard. And it’s neither transitory, as the Biden administration tried to convince us, nor is it good for us, as MSNBC tried to lecture us.
Unfortunately, we should probably get used to is as long as Joe Biden is in the White House.
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