Abby Walter said she started noticing her grocery bill was going up earlier this year. Prior to January, the Maryland resident had typically spent around $ 75 per week on groceries. Now his bill averages around $ 150 or even more.
Part of that increase is likely due to a change in where Walter shops. Due to a move, she and her partner stopped shopping at a discount market near their old home. Even so, she noticed that prices usually only keep going up – and going up more and more. The produce, eggs, meat and bread all cost more than before, Walter said. This prompts them to rethink their budget.
“It means we can’t buy a lot of the funniest things we want,” said Walter, a 29-year-old wildlife biologist. “We probably won’t travel as much, we probably won’t buy clothes even though we will be heading back to the office soon.”
Like Walter, other Americans know the dollar-and-cent reality of higher inflation. Consumer prices rose 0.6% in May, pushing the annual inflation rate to 5% over the past 12 months, the Labor Department said Thursday. This represents the fastest rate of increase since August 2008 and reflects the impact of significantly higher demand as consumers resume their meals, shopping and travel as the economy reopens.
Some food manufacturers and grocers are turning to ““to manage shoppers’ expectations, by packing food in smaller containers while charging the same amount. And it’s not just grocery store prices that are on the rise. in Morgan Stanley.
“This summer vacation can get expensive,” said Greg McBride, chief financial analyst at Bankrate, in an emailed statement. “Air fares went up 7% a month ago, and car and truck rental prices have more than doubled in the past 12 months. As capacity increases, these trends will subside, but it’s still unclear when that will happen. ”
Inflation is accelerating due to increased consumer demand, as well as bottlenecks in some industries. Lumber prices tripled during the coronavirus pandemic, following slowdowns at some sawmills during the crisis, addingthe cost of a new home and the rising costs of even simple home renovations.
True, many economists believe inflation will slow down later this year as supply catches up with demand in the aisles of grocery stores and other stores and markets. But until then, consumers can feel the pinch in their wallets.
The pain may be more acute for households still recovering from the pandemic, as well as those on fixed incomes, such as the elderly who depend on Social Security for most of their income.
A quarter of Americans have struggled to pay for household expenses in the past week, according to a Center on Budget and Policy Priorities analysis of data from a census survey in early May. And about 1 in 10 adults, or 19 million people, said they had struggled to provide enough food for their families in the previous seven days, the data showed.
Seniors, on the other hand, are stuck between rapidly rising costs and an increase in the cost of living that does not keep pace, at least for 2021. The Social Security Administration, which adjusts payments each fall for the year. the following year, the 2021 payments increased by 1.3%. . This means that Social Security checks are not keeping up with price increases hitting wallets this year.
“What we’re getting into now is that the elderly received a 1.3% bonus [cost of living adjustment] for 2021, and these rising costs are happening right now, so they’re very ill-prepared for this kind of inflation, ”said Mary Johnson, Senior Citizens League policy analyst.
And it comes after a 30% drop in purchasing power since 2000 for social security payments, according to a May study from the Senior Citizens League. This could erode even more if inflation continues to rise, the report warns. About a quarter of the more than 60 million seniors who receive social security depend on payments for 90% of their income, according to the group.
“For every $ 100 that a retired household spent in 2000, that household can only buy about $ 70 of the same goods and services today,” the report notes.
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There will be some relief in 2022, with Johnson and other experts predicting that next year’s cost-of-living adjustment for Social Security could be anywhere between 3% and 5%, depending on how the world evolves. inflation over the next few months to fall. But by then, consumers may have to postpone shopping or seek cheaper alternatives.
“We’ve been through a crazy time, and prices are just going to rebound a lot until things calm down,” said Alicia Munnell, economist and director of the Center for Retirement Research at Boston College.