HomeFinance NewsPersonal financeInflation's Grip Tightens: Brace for Higher Prices and Eroding Savings!

Inflation’s Grip Tightens: Brace for Higher Prices and Eroding Savings!


New data shows inflation is still high. Here’s how to measure how that affects you


Inflation, as measured by the Consumer Price Index (CPI), has been persistently higher than the Federal Reserve’s target of 2%.

This means that the cost of goods and services has been rising faster than many Americans’ wages.

To get a better idea of how inflation is affecting you, consider tracking your personal inflation rate.

Subtract your total monthly spending for March 2023 from your total for March 2024, then divide that number by your March 2023 spending.

This will show you how much your spending has increased due to inflation.

For example, if you spent $2,000 in March 2023 and $2,200 in March 2024, your personal inflation rate would be 10% ([(2,200 – 2,000) / 2,000] x 100).

Another way to gauge the impact of inflation is to track your grocery spending.

Prices of food items like milk, eggs, and chicken have fluctuated significantly in recent months.

Consider whether you can cut back on certain purchases or substitute cheaper products.

It’s also important to note that inflation has been more pronounced over the past three years.

The CPI is up almost 18% since 2020, meaning that wages have not kept pace with the rising cost of living for many Americans.

This can lead to reduced savings and increased credit card debt.

However, the good news is that real wages, or wages adjusted for inflation, are now higher than they were a year or two ago.

This indicates that many households are financially better off than they were recently, even though inflation remains a concern.

It’s also worth mentioning that the CPI may overstate inflation compared to other measures, such as the personal consumption expenditures price index (PCE).

The Federal Reserve uses the PCE as its preferred inflation gauge, as it is considered a more accurate reflection of household spending.

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    “Inflation — as measured by the consumer price index — rose 3.5% from a year ago and 0.4% for the month.”

    “Categories including juices and drinks, motor vehicle insurance or household repairs are up by double-digit percentages in the past 12 months, the CPI data shows.”

    “Consumers who depend on those products and services are likely feeling the effects of inflation.”

    “To get a better sense of how inflation is affecting you and your family, it can help to calculate your personal inflation rate.”

    “To come up with a specific calculation as to how inflation is affecting you, subtract your total monthly spending for March 2023 from your total for March 2024.”

    “Then, divide that number by your March 2023 spending to get your personal inflation rate.”

    “The CPI is up a little under 18% since three years ago, according to Greg McBride, chief financial analyst at Bankrate.”

    “Consequently, if your wages haven’t increased by that much over the same period, you’re more likely to feel the pinch of higher prices.”

    “That can contribute to a lack of savings and higher credit card debt, financial consequences many Americans are showing.”

    “About 60% of households are living paycheck to paycheck, McBride said.”

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