No one likes inflation. Currently we are experiencing some of the biggest increases on everyday items than I’ve remembered.
While the government has put out their estimates on what inflation is (6.8 percents), it seems dreadfully low when you walk down the isle of the grocery store and see many items have almost doubled.
Inflation doesn’t hit all items by the same amount, nor does it affect all budgets the same way. Your personal inflation rate could be higher or lower than the index, depending on where you live and what items you buy the most.
Nevertheless, any increase in inflation can hit ?retirees hard, despite the 5.9 percent Social Security cost of living adjustment (COLA)? that has gone into effect this month.
John Waggoner, writing for AARP, put together this list of five areas that have seen the biggest price jumps?.
Gas prices soared 58.1 percent in the past 12 months. The price of a gallon of unleaded gas now costs $3.33, according to the American Automobile Association (AAA), up from $2.16 a year earlier.
There is a good news… Gas prices have retreated slightly in the past four weeks, ?from when a gallon of fuel cost $3.41. Crude oil peaked at $85?.?4 a barrel in October; it closed at $71?.?67 on Dec?. 20. OPEC and its allies announced that they would increase oil production by 400,000 barrels per day in January, which should ?further ease gasoline prices.
Used Cars and Trucks…
If you’re hoping to find a bargain ?on a used ?vehicle, good luck: Prices have jumped 31.4 percent the past 12 months.
This is because of a shortage of new cars, whose prices have risen 11.1 percent. People get put off by the high price of new cars and bid up the prices of used cars.
Why is there a shortage of new cars? Because there’s a shortage of computer chips. The average new car can easily contain 3,000 computer chips.
Taiwan produces about half the world’s computer chips and, unfortunately, the COVID-19 pandemic has shut down factories and increased demand for smartphones and laptops as more people work at home. Although chip makers are ramping up production, adding new factory capacity in the industry means building more factories, and that takes time.
Food prices at home has risen 6.4 percent, according to the BLS.
The biggest price jumps in the category come from meat, poultry, fish and eggs, up 12.8 percent. Beef roasts are up about 26 percent from 12 months earlier; steaks have risen 24?.?6 percent. And if you’re bringing home the bacon, you’re paying 21 percent more for it.
Fuel prices are one reason food is getting more expensive. Natural gas accounts for 7?0 to 90 percent of the cost o?f producing nitrogen for fertilizer. If you want to get food to market, you’ll need fuel to get it there. And the companies that process meat and other products are suffering from shortages of workers thanks to the pandemic.
Postage and Delivery Services…
Postage has risen 7.2 percent the past 12 months, thanks in part to a three-cent increase in first-class stamps in August 2021.
The U.S. Postal Service also raised the price of packages delivered by priority mail, priority mail express and first? class?? by between 25 cents ?and $5 per package, depending on weight and where the packages are going.
FedEx and UPS have also increased their rates and added “surge pricing” which can increase the cost of shipping a package as much as $1.
Oh and “free shipping” well they are just rolling the additional costs into the product. In many cases if you order multiple items from a site that offers “free shipping” you will be paying more than a site that charges shipping.
If you’re older then ou spend 12.2 percent of your budget on medical care, compared to 7.?0 percent ?for the general population.?
The cost of ?a doctor visit ha?s increased 4.3 percent the past 12 months. More broadly, medical ?care services, which includes doctor, dental and vision services, have risen 2.1 percent the past 12 months, while eyeglasses and eye care has ?increased 1.1 percent.
Historically, the cost of medical care has risen faster than the broad inflation index, but that hasn’t been true lately, according to the Center for Retirement Research at Boston College.
It’s hard to believe, but the price of prescription drugs has fallen 0.3 percent the past 12 months, and the price of nonprescription drugs has risen just 0.8 percent. Bear in mind, however, that inflation costs are cumulative: The high medical price increases of the past 20 years are still with us, despite the current low inflation rate in the category.
The current inflation is certainly putting a crimp on retirees and would-be retirees. It is important to look at your overall finances and see where you can cut some corners in order to cope with the increases.
I was lucky enough to have an extra car that was barely being used. It was a 2016 and in great shape. I took advantage of the higher used car prices and sold the car for a mere $1500 less than I paid for it. I not only got cash in my pocket, I am saving money on insurance and license plates.