You’re tired of the rising prices and retreat to your living room couch and turn on your Television. Even there, you’ll come across newscasts and talk shows loaded with inflation talk.
What is happening? What is the meaning of this sudden spike in prices, you might ask.
Inflation is the answer. In simpler terms, the price of living has greatly increased in contrast to last year. As per the Bureau of Labor Statistics (BLS), overall prices spiked by 5.4% in July (this year) since June (last year) and 0.9% in the last month alone. The key drivers of inflation growth last month were mainly due to the indexes for food, home, energy, automobile, etc.
Here are a few sectors subject to rising prices that ought to affect our everyday lives.
The Overall prices of Food rose by 0.7% in July since last month and 3.4% since last year.
There has been a substantial rise in Consumer Prices of Meat, Poultry, Dairy & Milk – out of which meat has seen the highest spiking prices. Steak, Ribs & Pork Roasts are up by 4.4%, whereas Hot Dogs are now 4.8% costlier.
Meanwhile, Fresh Fruits & Vegetables have gotten a bit cheaper in July with Citrus fruits now costing 5.4% less.
Prices of Take out & Dine-ins now are 0.8% costlier. This is the highest monthly increase America has seen since February 1981.
So if you’re looking for a cheaper and more substantial meal, cooking at home beats eating out.
Although clothing prices were low during the early days of the Pandemic, they’re picking up with the reopening of the US Economy.
The prices of women’s dresses increased by 18.8% since last year and 5.5% in the past month.
Meanwhile, men’s sports coats and suits are 2.9% pricier in July in comparison with June prices.
With the reopening of workplaces & infrastructures, along with vaccinations being widespread, the prices may continue to spike.
Due to disruptions in the supply chain and a shortage of computer chips globally, prices of Trucks & Cars are skyrocketing simultaneously. In July 2021, the prices of new vehicles hiked by 1.7% and are still rising.
Meanwhile, the rebound in travel causes a boost in demand for rented cars; therefore, Car Rental Services now cost 74% more than in pre-pandemic times.
Even then, Car Rental Companies are finding it difficult to meet the demands of their existing fleet, resulting in a surge in the prices of used cars.
The prices of used vehicles went up by 41.7% compared to their price at the same time last year.
Suffice to say, prices of buying and hiring automobiles are going to cost you a lot higher in recent times.
During the period of lock-down, while the US economy is relaxing and with more and more people receiving vaccines, people are considering traveling; as a result, due to the increasing demand in travel, hotel & motel prices have risen – by 6.8% alone in July and by 24.1% over the past year.
Regarding inflation, The Federal Reserve suggests that it can scale significantly until finally, the US Economy returns to its normal state.
They also added that this rising inflation will help achieve healthier price growth in the long run.
However, with the wage rates growing only 4% since last year, it is proving to be rather difficult to live through these trying times.
Inflation refers to the rate at which the cost of daily products like food, energy, and transportation increase over a while.
This essentially means that the value of money will depreciate if you sit on it. Given that the Interest Rate on Savings isn’t high enough or the rate of increase in your income isn’t high enough, you’ll face a downswing in your standard of living.
Inflations cause more damage to people who are relying on their savings or pensions due to their limited disposable income. This causes them to compromise with their current standard of living.
This is especially true for past officials who are relying on pensions. Pension funds may grow annually but they are no match for rising inflation level levels.
Having said that, it is wise to keep some liquid cash available in the form of working capital to invest in promising small and essential businesses. in a bank account (for your daily expenses) and invest the rest of your money to ensure returns on your money.
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