The cost of living is not going down any time soon.
the main points
- The CPI has risen to the highest level in decades, and it shows that inflated prices may be the norm for some time.
- Now is the time to carefully consider increasing your income and budgeting.
It’s no secret that inflation has wreaked havoc on consumers since mid-2021. At some point late last year, many of us couldn’t help but ask, “How bad are things really?”
On January 12th, we got an answer. The Consumer Price Index, which measures the cost of consumer goods, rose to 7% in December. This is the fastest rise in inflation since June 1982. And while this 7% rise was in line with what economists had predicted, it doesn’t make swallowing the pill any less difficult.
Prices continue to rise in all areas
Food prices rose 0.5% in December compared to November, and increased 6.3% year-over-year. This is the biggest rise in grocery prices since October 2008.
Shelter cost also increased 0.4% from the previous month and 4.1% from the previous year. This is the fastest pace since early 2007.
Used car prices have also skyrocketed, and are now 37.3% higher than they were a year ago. As the pandemic continues, many people are looking for alternatives to public transportation. But at the moment, buying a car is far from affordable.
You may think that you as an individual are helpless in the context of inflation. but there be Steps you can take to improve your financial picture as prices go up.
For one thing, start by following a budget if you haven’t already. Having one makes it easy to track your spending and decide which categories you can cut back on.
You can also shop more strategically. Food costs can go up, but if you plan your meals and eat dinner at home a lot, you may actually save money despite the higher prices at the supermarket.
You can also consider increasing your income with a second job. One silver lining at the moment is that while the cost of living may be rising, jobs are plenty available. If you’re willing and able to make the time, a side hustle might be the only thing increasing your paycheck and covering the higher expenses you have to deal with. (On a related note – if you have a car, consider driving for passenger service. Demand may be higher, now that public transportation is less attractive and used cars are expensive.)
The December CPI reading wasn’t particularly shocking, given the outlook. But it sends a clear message that higher prices may be here for some time. If you have savings to indulge in, you may be in a very good position to get out of the current wave of inflation. If not, it is wise to get a budget, rethink your spending, and do what you can to increase your income. It’s much better than the alternative – going down in debt, ruining your credit, and risking your financial security.
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