Red inflation may finally show signs of coolingbut around the US the cost of living it still fires. Consumer prices rose 8.5% last month from a year earlier, the Labor Department reported last week. While that figure may be lower than economists expected, it represents another turn of the screw for family budgets.
How much has inflation reduced our purchasing power this year? These days, a dollar is worth about 86% of its value three years ago, according to an online inflation calculator. This means that an item that cost $100 in 2019 would cost $115 today.
MoneyWatch: The Uncertain Economy: How to Stretch Your Dollar at the Grocery Store
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In more tangible terms, this means that spending $100 on lunch with a friend in 2022 will get you one less mimosa, or the equivalent of about $15 less than in 2019. Going even further back, a spend worth 100 dollars in 2000 would now cost $172. A $100 purchase in 1980 would cost you a whopping $359 at today’s prices.
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Undoubtedly, some level of inflation is a natural part of economic growth.
“The US experiences inflation almost every year, and has done so since the 1950s,” CBS News’ Errol Barnett said. “So it’s normal that the dollar has declined in value over time.”
What is not normal is the current rate of excessive inflation, which is more than fourfold The Fed’s annual target of 2%. The problem, Barnett added, is that “salaries also don’t rise consistently to match the fact that things are more expensive.”
“We’re actually noticing more money coming out of our bank accounts than going in,” he said.
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