Banking, finance, and taxes

6 Things Americans Need to Know About Inflation

Douglas A. McIntyre

Published: July 9, 2022 8:05 am

Last Updated: July 11, 2022 11:22 am

Inflation has started to cripple the U.S. economy. High prices for many things Americans find essential have risen in double digits. At the high end of the increases are daily purchases which include gas, some meats, and a number of other household food items. For people who have needed a new or used car this year, prices have risen by as much as 50% compared to 2021.

Americans need to know six things about inflation that they can use help fight or at least mitigate its effects. Some mean curtailing consumption. Others mean dropping consumption of some things completely. And, when people know what causes inflation, they are better off in making adjustments than those who don’t.

The most important data economists use to detect inflation by product or service is the Bureau of Labor Statistics’ Consumer Price Index Summary. It is available to the public. It measures the price increases of dozens of items every month compared to the same month in 2021. Among the items with high inflation rates that Americans can avoid buying are eggs, chicken, and some types of clothing.

Gas prices have hit millions of consumers more than any other item. In early 2021, the price of an average gallon of regular gas nationwide was about $3. The figure recently went above $5. People who can avoid discretionary driving can save hundreds of dollars of expense a month. It is critical to understand that the oil shortage could last well into next year. Gas prices aren’t coming down, and could rise.

Wages are not rising as fast as inflation for tens of millions of Americans, which means long term belt tightening is essential when possible. National inflation is up over 8%. Average wages are rising at a figure closer to 5%.

Homes heated with oil are a significant contributor to housing costs for millions of Americans. The only way around this is to drop the temperatures at which heating kicks by a few degrees. Holding heating temperatures at 68 degrees saves a great deal of money compared to 72 degrees.

The price of some household items are falling, or at least rising more slowly than the national inflation rates. People can take advantage of this to help lower their cost of living. Among these are food available at workplaces, and some types of insurance.