Inflation and Cost of Living

If you drove a car and paid rent last month, you felt the worst effects of inflation. The Consumer Price Index rose 0.4% in March, the same as February. But rent and gasoline accounted for half of the increase.

 The energy index, which includes gasoline, rose 1.1% – a significant one-month move. The price of gas rose 1.7% and is up 1.3% over the last 12 months.

Gasoline prices are rising in concert with oil prices. According to AAA, the national average price of regular gas is $3.61 a gallon, seven cents higher over the last seven days and 22 cents higher than a month ago.

The cost of shelter has risen at least 0.4% per month since November and is 5.7% higher year-over-year. Most of that increase is the result of rising rent.

Some relief

Though it might not feel like it, there is some relief at the supermarket. The cost of groceries showed no increase for a second straight month in March and is up 1.2% over the last 12 months. But it all depends on what you buy.

The cost of fruits and vegetables fell 0.3%, the price of dairy and related products declined by 0.4% and cereal and grain prices fell by 0.6%. But meat, poultry, fish and egg prices jumped by 0.8%.

The cost of food consumed away from home, the government’s category for restaurant meals, continued to be a pain point for diners. Those costs rose 0.3% from February to March and are up more than 4% over the last 12 months.

 The index for limited-service meals rose 0.3% while the index for full-service meals increased 0.2%, suggesting fast food menu prices are rising faster than full-service restaurants.

For once, the story isn't about grocery items that have gone up the most but those that have come down in price.

The March ConsumerAffairs Datasembly Shopping Cart Index declined slightly from February but is up 3.6% over March 2023. The Index is composed of 25 commonly purchased grocery items. Datasembly tracks their price movements in real-time.

The March Shopping Cart checks out at a price of $160.99. That compares to $161.19, the cost of February's Shopping Cart.

Prices of white rice and peanut butter, which were up sharply in February, declined significantly last month. Also, butter and coffee prices were lower by at least 20 cents.

Many other items rose or fell by two or three cents and several items showed stable prices.

The price of cookies was sharply higher, hit by the high costs of sugar and cocoa. Bacon prices were 7% higher and the price of paper towels rose by 2%.

The FebruaryShopping Cart Index

After chip stocks, the best bet on Wall Street in the first quarter of 2024 has been the price of gold. The precious metal, which began to rally in mid to late 2023, breached a new record Monday at $2,262.19 an ounce.

SPDR Gold Shares, the ETF that tracks the price of gold and which many investors use to purchase gold, has risen 8.5% over the last three months.

What’s behind the rally? The same reason many stock prices are also climbing. The latest inflation data reinforces the belief that the Federal Reserve will cut interest rates as early as June. Analysts say lower interest rates make gold more attractive because fixed-income assets are less attractive.

Alex Ebkarian, COO and co-founder of Los Angeles-based Allegiance Gold, recently told ConsumerAffairs that gold also performs well in times of high inflation and the threat of recession – two other economic possibilities that can’t be completely ruled out. And then, there’s supply and demand.

“Gold’s finite supply and the worldwide demand for it by central banks, and even the perceived demand for it by BRICS nations, will keep the price of gold elevated in 2024,”Ebkarian said.

Optimism from the Fed

Gold investors also took heart from Fed Chairman Jerome Powell’s comments on Friday, when key inflation data came in a bit less than expected. Powell said the data for February was “more along the lines of what we want to see.”

Before rushing out to buy gold, however, it’s a good idea to do some research and get advice from a trusted and objective financial adviser. Robert Johnson, professor of finance at the Heider College of Business, at Creighton University, says there is an opportunity cost of investing in gold, since over time stocks tend to appreciate at a faster rate.

“While having a small position in precious metals may dampen portfolio volatility in the short-run, the tradeoff between slightly dampened volatility and the lost long-term return is certainly not a prudent one, particularly for Gen Z/millennials with long investing time horizons,” Johnson said.

Before selecting a gold broker, investors might want to check out what the experts at ConsumerAffairs found when they looked into the best gold brokers.

The monthly Consumer Price Index (CPI) measures price movements for just about every consumer expense in the economy. But for the average family, how much has the price of essentials – the money you have to spend each month – gone up? Probably more than you think.

A recent report, doxo’s 2024 U.S. Household Bill Pay Report, shows the cost of living for the average family has risen 4% in the last 12 months, higher than the 3.2% measured by the February CPI.

The report found that the average U.S. household spends $25,513 per year, or 34% of income on the 10 most essential household bills, and also breaks out the household spending market size for each of these bill categories, percentage of households that pay each bill, and average monthly and annual bill pay costs by state.

The researchers estimate consumers spend $3.35 trillion annually on these 10 essential expenses. It is worth noting that neither food nor gasoline, things most families spend on each week, are included in the 10 essential items.

10 essential items

Here is doxo’s list of essential items, with the estimated total annual expenditure:

• $885B Mortgage

• $656B Rent

• $571B Auto Loan

• $451B Utilities

• $271B Auto Insurance

• $180B Mobile Phone

• $156B Cable & Internet

• $133B Health Insurance (consumer-direct portion)

• $34B Life Insurance

• $17B Alarm & Security

The average monthly amount of each bill paid in each category is:

“While we’re starting to see an overall cooling of inflation, American sentiment towards their own financial health remains bleak,” said Liz Powell, senior director of Insights at doxo. “Seventy percent of American consumers report they’re still worried about their financial well-being despite a stabilizing economy.”

February’s Consumer Price Index (CPI) rose more than expected but inflation over the last 12 months has moderated, rising at a rate of 3.2%. But some things that consumers pay for regularly have gone up a lot more, and these expenses may be causing the most pain.

Car insurance, car repair and maintenance, renting or owning a home, pet care and child care are steadily increasing, putting a dent in most household budgets.

One of the biggest pain points is car insurance. Over the last 12 months, the cost of insuring a motor vehicle has shot up by 20%. It didn’t go down in February, rising 0.9%.

Industry experts point to several reasons for the increase. They say there are more serious traffic accidents and the costs of parts and labor to have risen. When vehicles are a total loss, the costs of replacing them are also higher.

And it costs more to keep them running

Not only is it costing more to insure cars and trucks, but repair and maintenance costs have risen 6.7% since February 2023. Those costs were up 0.4% in February.

Next is shelter, which rose in cost by 0.4% last month and is 5.7% higher than February 2023. Renters faced a 0.4% one-month increase with rents up 5.8% year-over-year. 

Shelter wasn’t any cheaper for homeowners. Owners’ equivalent of rent expense rose 0.4% for the month and is 6% higher than a year ago.

The cost of caring for a pet is also still rising. Veterinarian services rose 0.9% last month and are up 7.9% yearly.

Caring for children also costs more. Childcare services are lumped in with tuition and school fees, all of which went up 0.4% in February and are 3% higher on the year.

While it’s true that some costs have actually gone down – like airfares – they aren’t costs that consumers usually have to pay each month.

If grocery shoppers avoided just a few items last month, they likely saved money. But if they stocked up on white rice, peanut butter and frosted donuts, they paid a lot more.

The February ConsumerAffairs Datasembly Shopping Cart Index rose from $157.65 in January to $161.19 in February, an increase of 0.02%. Three items accounted for most of the rise.

The price of peanut butter surged 33%, frosted donuts cost 20% more while white rice prices rose 17.3%. Datasembly collects retail grocery price data in real time.

But prices of other grocery items have begun to fall. Shoppers paid less for whole bean coffee, salted butter, potato chips and bacon.

The FebruaryShopping Cart Index

Consumers are still spending more at the grocery store, and though inflation has cooled in recent weeks the latest Consumer Price Index (CPI) is still showing rising grocery prices. 

The CPI breaks down the cost of food into two categories – food at home, which accounts for groceries, and food away from home, which includes restaurants, fast food, take out, etc. 

Overall, the price of food at home has gone up 2.6% over the last 12 months. On top of that, the cost of food at home increased 0.4% between December 2023 and January 2024, which is the highest single-month increase in the last year. 

What prices have gone up?

The CPI has six categories under the “food at home” umbrella: cereals and bakery products; meats, poultry, fish, and eggs; dairy and related products; fruits and vegetables; nonalcoholic beverages and beverage materials; and other food at home, which consists of fats and oils, sugars and sweets, and other foods. 

As of January 2024, four of the six categories saw price hikes. One category saw a price decline – cereals and bakery products – while one category remained without a price change – meats, poultry, fish and eggs. 

That leaves four categories with price increases. Nonalcoholic drinks took the lead with price hikes, as this category went up 1.2% in January. This is a whole point higher from the previous month, when prices had gone up 0.2%. 

The CPI breaks down the categories even further to get specific about monthly cost changes of individual items. For instance, in the nonalcoholic drinks category, frozen noncarbonated juices and drinks had the biggest price increase at 9.9%. Instant coffee, at 1.8%, came in second, while carbonated drinks and juices saw 1.6% and 1.4% price hikes, respectively. 

Dairy and related products had the lowest price increase at 0.2%. Additionally, the “other food at home” category went up 0.6%, while fruits and vegetables went up 0.4% in January. 

More price increases over 1% in January include spices, seasonings, condiments, and sauces; soups; margarine; sugar and sweets; processed fruits and vegetables; fresh vegetables; tomatoes; lettuce; cheese and related products; eggs; and hotdogs. 

Is it all bad news?

While grocery prices went up overall in January, there were some areas where prices dropped throughout the month. Several categories saw price decreases over 1%, including: 

• Flour and prepared flour mixes

• Fresh cakes and cupcakes

• Crackers, bread, and cracker products

• Uncooked ground beef

• Bacon and related products

• Ham

• Fish and seafood

• Fresh whole milk

• Ice cream and related products

• Fresh fruits

The months-long trend of falling mortgage rates has come to an end, at least temporarily. After bottoming around 6.5%, Freddie Mac has reported a recent reversal.

"On the heels of consumer prices rising more than expected, mortgage rates increased last week,” said Sam Khater, Freddie Mac’s chief economist. “The economy has been performing well so far this year and rates may stay higher for longer, potentially slowing the spring homebuying season. According to our data, mortgage applications to buy a home so far in 2024 are down in more than half of all states compared to a year earlier.”

The 30-year fixed-rate mortgage averaged 6.77% as of February 15, 2024, up from the previous week when it averaged 6.64%. A year ago at this time, the 30-year rate averaged 6.32%.

The 15-year fixed-rate mortgage averaged 6.12%, up from the previous week when it averaged 5.90%. A year ago at this time, the 15-year rate averaged 5.51%.

Rising rates make it more difficult to find a house with an affordable mortgage payment. Lenders appear to have hiked rates in response to January’s hotter-than-expected Consumer Price Index (CPI), which means the Federal Reserve may keep rates higher for longer.

The jump in mortgage rates comes just as the spring homebuying season is set to get underway, timing that is bad for both buyers and sellers. But buyers may have some options.

What to do

If the seller is highly motivated, they may be willing to “buy down” the mortgage rates by “paying points” at closing. This was common practice in the 1980s and 1990s, when mortgage rates were high.

Most states offer some type of homebuying assistance. You can check your state here. Some of these programs offer down payment assistance, as well as educational resources to find the right loan.

In a rising interest rate environment, it also is critically important to shop around for the best mortgage with the best term. The best mortgage lenders offer a well-rounded approach for customers. 

Competitive interest rates and fees, a variety of mortgage products, a straightforward process, and wide availability are a few of the qualities most helpful to homebuyers and those who are refinancing.

ConsumerAffairs has a buyer’s guide to help home buyers find the best lenders with the best rates.

Inflation is still “sticky” as the Labor Department’s Consumer Price Index (CPI) didn't fall as much as expected in January. Prices rose 0.3% last month for an annual inflation rate of 3.1%.

That’s down from December’s 3.4% inflation rate but economists were expecting the annual rate to drop below 3%. Two reasons it didn’t are rent and restaurant meals.

The cost of shelter rose 0.6% in January and is up 6% over the last 12 months. That increase accounted for two-thirds of January’s CPI increase.

While grocery prices are rising at a much slower rate the cost of food consumed away from home – mostly at restaurants – continues to rise at a faster pace. The cost of food consumed away from home increased 0.5% from December and is 5.1% higher year-over-year.

Some groceries are getting cheaper

Grocery shoppers saw higher prices for cereals, produce and bakery products last month but there were significant price declines for meat, poultry, fish, eggs and dairy products.

At restaurants, menu prices rose faster at fast food and fast casual places than at full-service restaurants.

A few things cost less last month. Consumers paid a lot less for energy in January. Natural gas prices are down more than 17% year-over-year while fuel oil prices have declined more than 14% during the same period.

Used car prices also declined, falling 3.4% in just 30 days. For the year, used vehicle prices are down 3.5%. New car prices were flat for the month and are up only 0.7% in the last 12 months.

Oliver Rust, head of Product at independent economic data provider Truflation, says the January CPI was a surprise.

“We expected a much more pronounced fall,” Rust said. “This small decline is out of line with the typical seasonal trend, which tends to see a spending slump following December’s exuberant consumption.”

Inflation eased a bit at the grocery store in January. The ConsumerAffairs Datasembly Shopping Cart Index, based on 25 commonly purchased grocery items, rose just $0.67 from December.

But the Index was up $5.52 over January 2023. That's an annual increase of 3.6%.

Many grocery items didn't change much at all. Most of the increase can be traced to just three items.

The price of a 2-liter bottle of cola rose from $2.87 in December to $3.11 in January. It was $2.72  in January 2023.

A 30 oz. jar of mayonnaise cost $5.85 in December -- and in January 2023 -- but sold for $6.10 last month.

The price of a 16.3 oz. jar of peanut butter cost $3.31 in December but rose to $4.02 in January -- a 2.1% increase in just one month.

Meanwhile, the price of some items continued to fall. A 16 oz. package of bacon cost $7.84 last month, down from $8.26  in December. The price of a 12 oz. package of whole bean coffee last month was $12.56, down from $12.91 in December. It's down 1.2% from January 2023.

The Shopping Cart Index

There was good news for grocery shoppers in December. The cost of groceries, as measured by the ConsumerAffairs Datasembly Shopping Cart Index, declined from November but remains above the December 2022 level.

The index tracks price movements of 25 commonly-purchased grocery products, including both food and non-food items. In December 2022, the 25 items cost $155.34. 

In December 2023, the index totaled $156.98, down from $157.19 the month before, a decline of less than 1%.

The December index would have been significantly lower if not for one item -- a 14.3 oz. package of cookies. The sweets rose in price from $5.67 in November to $7.04 in December, a jaw-dropping 24% increase. The price of that package of cookies is up 53% over December 2022.

Otherwise, price movements were fairly tame. The price of paper towels declined 1% from November to December.

Coffee prices continue to fall. A 12 oz. bag of whole-bean coffee cost $12.91 last month, nearly 2% less than the month before.

The Shopping Cart Index

Just like stocks, gold priced in U.S. dollars has begun 2024 moving lower. The price has dipped after hitting record highs late last year.

But where does it go from here? No one has a crystal ball but the experts ConsumerAffairs consulted suggest price movement hinges on the geopolitical environment and several economic factors.

Alex Ebkarian, COO and co-founder of Los Angeles-based Allegiance Gold, believes conditions are ripe for gold prices to increase in 2024.

“Economic uncertainty may push gold higher,” Ebkarian told ConsumerAffairs. “Uncertainty makes investors nervous and when investors get nervous, the money goes to gold.”

Ebkarian says investors should look to the Federal Reserve for clues. If the Fed delays its expected rate cuts, he says that’s a sign that inflation is still a concern and that’s bullish for gold.

Liam Hunt. director and analyst at SophisticatedInvestor.com, says any rise in gold prices would likely be driven by continued geopolitical tensions or conflict spillovers in the Middle East, inflationary pressures, or unexpected Fed policies that would boost demand for the yellow metal as a safe-haven asset.

Buying opportunity ahead?

“On the other hand, a pullback in gold prices is more likely to occur than not,” Hunt told us.

“This is because interest rates are expected to start declining in the second quarter of the year, which would see easy money flowing back into more speculative asset classes. Central Bank monetary easing policies, which are anticipated in the months ahead, would likely have a bearish effect on gold prices in the immediate term.”

Robert Johnson, professor of finance at the Heider College of Business at Creighton University, prefers investing in stocks over other types of assets, pointing out their long-term consistent gains.

“Simply put, one should never consider investing in gold if you have a long-term time horizon, as the long-term returns are far below those of equities,” Johnson said. 

But very few personal finance advisors suggest putting all of your eggs in the gold basket. CNBC’s host of “Mad Money,” Jim Cramer, has advocated keeping some money invested in the precious metal as a hedge against inflation. He recently advised his followers to choose gold over cryptocurrency after the spike in Bitcoin drew investors to that digital currency.

Just in time for holiday baking, “eggflation” is back. The price of eggs, which soared to record highs in 2022 amidst an avian flu outbreak, is climbing once again.

When the Labor Department reported November’s Consumer Price Index (CPI) it noted that the price of eggs jumped 2.2% from October to November after rising just 01.% the month before.

That price move has also been recorded by Datasembly, a company that tracks retail grocery prices in real-time. The company says egg prices were a major influence in rising grocery prices during the month.

“It’s at the local level that we can see the most dramatic changes,” a Datasembly spokesperson told ConsumerAffairs. “This is specifically true with the rapidly changing prices in eggs.  The range of increases varied quite a bit across different major metro areas and states.

For example, consumers in Phoenix, Minneapolis and Des Moines saw the biggest increase in egg prices. South Dakota, Montana and Iowa are the states with the biggest November egg price increase.

The reason?

Egg prices also rose much faster in rural communities than in urban and suburban areas. So why are egg prices on the march again?

It’s much the same reason as the 2022 surge. The U.S. Department of Agriculture reports bird flu seems to be making another appearance at the end of 2023.

As of Dec. 15, 25 states had at least one confirmed infection in at least one flock. Infections peaked in November but have remained high in December, suggesting higher egg prices might be unavoidable in early 2024.

Inflation was relatively flat last month as the Labor Department’s Consumer Price Index (CPI) rose just 0.1% from October. Over the last 12 months, inflation has averaged 3.1%, down from the June 2022 peak of 9%.

That suggests the Federal Reserve’s policy of hiking interest rates has been effective in bringing down prices. In November, gas prices were down, along with most energy commodities.

Used car prices continued to fall while the increase in grocery prices continued to slow, rising just 01.%, a much slower rate than restaurant prices.

One area where inflation remains fairly hot is in the labor market, which – if you're looking for a job – isn't so bad. But Oliver Rust, head of Product at Truflation, says that can contribute to higher prices

“We expect the strong employment situation will continue to put upward pricing pressure on services,” Rust told ConsumerAffairs. “As a result, we see the headline CPI index rising again to 3.5% by year-end. It will likely remain elevated for longer than anyone anticipates, so bringing the index down to the 2% target will be a difficult task for policymakers.”

If you had money in stocks or Bitcoin in November, you did very well. Wall Street enjoyed a strong rally on the belief that the Fed is getting inflation under control and will stop raising interest rates. 

Bitcoin remains volatile, selling off sharply this week after a huge rally in November that took the price of the digital currency to $43,000.

Hoping for a ‘soft landing’

But a “soft landing” – falling inflation without a recession – is far from certain and some traders have hedged their bets by purchasing gold. Though prices are at a three-week low this week, there are plenty of tailwinds that can provide support. For one, central banks and governments around the world have increased their purchases of the precious metal in 2023.

Bond yields are down from their recent highs but savers can still find certificate of deposit (CD) rates above 5%. According to Forbes, this week’s highest CD rate is 5.87% APY for a one-year CD. As an added benefit, the money is insured up to $250,000 by the Federal Deposit Insurance Corporation.

So, as economic conditions begin to reveal themselves, where’s the best place to put your extra cash? It’s advisable to consult an objective and trusted financial adviser before making any major moves.

But one legendary investor has made moves this year that suggest he is erring on the side of caution. Berkshire Hathaway Chairman Warren Buffet got Wall Street’s attention this week when it was disclosed that he sold more than $28 billion in stock in the first three quarters of 2023.

The question marks hanging over the economy may persist for at least another month.

Many supermarket prices have leveled off over the last couple of months but the rising cost of sugar and salt contributed to grocery inflation last month.

The ConsumerAffairs-Datasembly Shopping Cart Index, which tracks the prices of 25 commonly-purchased items, rose from $156.55 in October to $157.19 in November. The cost of items in the shopping cost totaled $155.66 in November 2022.

That increase is well below the overall inflation rate, as measured by the Consumer Price Index (CPI), several items rose at a much faster rate. For example, a box of cookies costing $4.51 a year ago increased to $5.67 last month, a 25% jump.

A box of honey nut cereal, which cost $5.31 a year ago, rose to $5.56 last month. A loaf of honey wheat bread rose from $3.39 in November 2022 to $3.79 last month.

The price of paper products is also still rising. Select-A-Size paper towels cost $21.85 last month, up from $21.56 a year ago. Twelve rolls of toilet paper cost $12.84 in November 2022 but sold for $12.92 last month.

Among the items that dropped in price from a year ago were sliced cheese, eggs and whole bean coffee, whose price declined by 14.3%.

The Shopping Cart Index

The overall inflation rate took a breather in October as falling gasoline prices offset other areas of the economy where prices continued to rise. The Labor Department’s Consumer Price Index (CPI) was unchanged last month after rising 0.4% in September.

That puts the inflation rate over the last 12 months at 3.2%, down from 3.7%  in September.

The price of gasoline plunged 5% in October after rising 2.1% in September. The price at the pump is 5.3% lower than October 2022. According to AAA, today’s national average price of regular gasoline is $3.35 a gallon. One year ago, it was $3.77.

The decrease in gas prices cushioned the blow from another increase in the cost of shelter, notably rent. The Shelter Index increased 0.3% last month, on top of a 0.6% rise in September. For the last 12 months, the cost of putting a roof over your head is up 6.7%, the second largest increase behind transportation services.

Food prices still rising

As we reported last week, the ConsumerAffairs Datasembly Shopping Cart Index, which tracks 25 common-purchased items, rose 1.4%. The CPI found the cost of all food categories rose 0.3% in October for a 3.3% annual inflation rate. However, the split between food purchased at grocery stores and food served in restaurants continued to widen.

The price of food consumed at home is up 2.1% over the last 12 months while the price of food consumed away from home is 5.4% higher.

Four of the six major grocery store food group indexes increased over the month. The index for meats, poultry, fish, and eggs rose 0.7% in October as the index for beef increased 1.2% and the index for pork rose 1.3%. 

The other food-at-home index increased 0.3 percent over the month, as did the dairy and related products index. The index for cereals and bakery products rose 0.2% in October, after falling 0.4% in September.

The fruits and vegetables index was unchanged over the month, as it was in September.

Menu prices are rising even faster

The food away from home index rose 0.4% in October, as it did in September. The index for limited-service meals – think fast food – increased 0.5% and the index for full-service meals rose 0.3% over the month. 

Heading into the cold weather months there was good news for consumers heating their homes with oil. The price of heating oil decline by nearly a full percentage point in October and is 21% lower than a year ago.

The cost of a new car or truck dipped 0.1% last month, in spite of an auto workers strike that limited production. On a year-over-year basis, however, the price of a new car is almost 2% higher. Used car prices continued to fall last month and are now 7.1% cheaper than a year ago.

Going somewhere, putting a roof over your head and food on the table all continued to be increasingly expensive last month, as the Labor Department’s Consumer Price Index (CPI) rose a hotter-than-expected 0.4% over August.

Over the last 12 months, the CPI has risen 3.7%, the same as the month before. A handful of consumer expenditures caused the most pain.

The cost of shelter was the largest contributor to the monthly all-items increase, accounting for over half of the rise. An increase in the gasoline index was also a major contributor to the all items monthly increase. While the major energy component indexes were mixed in September, the energy index rose 1.5% over the month. 

The food index increased 0.2% in September, as it did in the previous two months. But there was a big difference in the cost of groceries and food consumed at restaurants. The index for food at home increased by 0.1% over the month while the index for food away from home rose by 0.4%.

Overall, the cost of transportation continued to go up. Not only did gasoline prices rise 2.1%, but the cost of keeping vehicles running continued a multi-month rise. The cost of maintaining and repairing cars and trucks rose 10.% last month while the cost of insuring those vehicles surged by nearly 19%.

Here’s what was cheaper

The only break consumers got as far as transportation is concerned is if they traveled by air. In September, airfares dropped by 13.4%.

Paying for a place to live is getting to be increasingly difficult. In September, rents and assorted costs rose 7.4%. It wasn’t much cheaper for homeowners as the owners’ equivalent of rent costs increased by 7.1%.

Among food costs, dairy and related products was the only category to get cheaper in September, falling by 0.2%. Consumers using natural gas also saw relief as the price plunged by 19.1% from August.

The price of used cars and trucks dropped another 8% last month but remain well over their pre-pandemic cost. A lengthy auto workers strike could well reverse that consumer-friendly trend in the months ahead.

Oliver Rust is head of Product at independent inflation data aggregator Truflation, which tracks prices in real-time. He says prices appear to be falling this month.

The increase in [September] inflation was driven by gasoline and housing, with some downward relief coming from utilities, medical care, and used cars,” Rust told ConsumerAffairs. “In comparison, Truflation data puts U.S. CPI at 2.37% as of October 12, as our diverse, real-time data streams show strong declines in the food and beverages, utilities, and health sectors over the last quarter.”

On its face, the May Consumer Price Index (CPI) shows progress in the fight against inflation. Prices, the way the Labor Department measures them, rose 1% over April and were up 4% compared to May 2022.

In June 2022, the CPI peaked at a 9% inflation rate so officially, inflation has nearly been cut in half over the last 11 months. But consumers are still feeling pain in some important areas.

The index for shelter was the largest contributor to the monthly increase, followed by an increase in the index for used cars and trucks. Those prices are rising again after a brief respite early in the year.

The food index increased 0.2% in May after being unchanged in the previous two months. The index for food purchased at grocery stores and consumed at home rose 0.1% over the month while the index for food away from home – mostly at bars and restaurants – jumped 0.5%.

Housing costs continue to push higher

The cost of shelter – mostly rent – rose 0.6% over April, continuing its steady increase. Year-over-year, the cost of putting a roof over your head is up 8%.

Personal transportation costs also continue to rise. The cost of used cars and trucks jumped 4.4% in May, matching April’s increase. Year-over-year, the cost of used vehicles is 4.2% lower.

New car prices dipped slightly – 0.1% – as inventory levels improved. However, on an annual basis, the cost of a new car is up 4.7%.

When it comes to food, it was much more economical to eat at home last month than go to a restaurant. Food purchased at grocery stores and prepared at home rose 0.1% after two months of declines. For the year, grocery costs are up 5.8%, a significant pain point for consumers.

Grocery prices are still expensive

The index for cereals and bakery products rose 10.7% over the 12 months ending in May. The remaining major grocery store food groups posted increases ranging from 0.3% for meats, poultry, fish, and eggs to 9.2% for other grocery categories.

The cost of eating out rose 8.3% over the last year. Checks at full-service restaurants rose 6.8% year-over-year while the tab for fast-food restaurants rose even higher – 8% over the last 12 months.

Energy was one of the few categories where consumers found relief last month. The energy index dropped by 3.6% in May after rising 0.6% in April. Gasoline prices provided the most relief, falling 5.6% in May and are down more than 19% from May 2022.

The menu prices these days continue to make diners' eyes pop out of their heads. Prices at restaurants are rising faster than those at grocery stores and now, the average menu price is up 15.6% over a year ago.

Among the biggest hikes in the average cost of a popular meal can be found at Panera Bread, with a price of $14.76; Chipotle at $14.34; Shake Shack at $13.50 a meal; Blaze Pizza at $13.72 and Jersey Mike’s at $13.23.

And with "dynamic pricing" being bandied about, consumers might have to play games with menu prices that change depending on how many customers they have at any given hour.

And that’s just in the fast-casual world. To make matters worse, some upline “fancier” restaurants have decided to take a cue from Airbnb hosts and add some extra charges. Consumers are sounding off on social media.

“Looking to [take] my wife out to dinner in SF. On a restaurant's website they list: 20% mandatory tip (they call it an equity fee, whatever that means). 5% San Francisco health care tax. 8.625% sales tax. That's an extra 33% on top of your bill. Looks like I am cooking at home,” John Savage tweeted.

Is this ethical? Restaurants can do whatever they want, but diners are pushing back. A recent study found that only 42% of consumers are willing to cough up and pay full price to eat at their favorite go-to restaurants. 

Insider tips on saving at restaurants

To see how the other 58% can keep the menu price mongrels at bay, ConsumerAffairs asked a group of discount-thinking, food-loving experts for their personal tricks.

Share and share alike: Nina Swasdikiati, owner and founder at Ping Pong Thai in Las Vegas, told ConsumerAffairs that if she were looking for a way to save money on dining out, she would look for restaurants that served “shareable” portions. 

There are lots of restaurants that have family-sized meals for carryout – e.g., Olive Garden and Panera – and the one chain that has built its reputation on shareable, family-sized meals is classic Italian family-style eatery Buca di Beppo.

There are also tons of BBQ joints where platters of ribs or wings can be shared, but other than that, it takes a little work to find dine-in restaurants where a family can get the same thing.

Doing some homework on what options are available, ConsumerAffairs found that Foursquare.com does a version of tracking down where shareable meals can be found city by city. The best search term ConsumerAffairs found to make that happen is “The 15 Best Places for Big Portions in [name of town].”

Googling for discounts: ConsumerAffairs recently did an article about where to find the "cheapest eats," but in updating our research, we found that Eater.com also curates a list of budget-friendly restaurants for major cities. Just search for “[name of city – e.g. “Detroit’s”] Best Budget-Friendly Restaurants” to find recommendations.

Search for restaurant-specific discounts: For example, when we searched “discounts at Outback Steakhouse,” there were bundles, day-of-the-week discounts, happy hour specials, and every day full meal discounts for military veterans, medical professionals, and state or federal service members.

Search for “free meals for kids”: An additional search tip came from Andrea Woroch, a consumer and money saving expert, who told ConsumerAffairs to look for free kids' meals. “If you are dining out with children, check with local restaurants to see which ones offer free kids meals,” she said. And she’s right – ConsumerAffairs found a whole slew of chains that offered that perk, but to each their own. For example, on Tuesdays, if someone orders at least $15 on the Bob Evans app, they’ll get a free kids’ meal (one per customer).

Buy gift cards in bulk: Woroch also suggests that if a family has a favorite restaurant, they should buy a lot of gift cards from there. “Warehouse stores like Costco sell restaurant gift cards in bulk at a discount. You can get $100 worth of gift cards to California Pizza Kitchen for $80,” she said.

Skip the extras: “No, you don't need that extra portion of fries, a diet Coke, or dessert,” says Derek Sall, founder and lead of Life And My Finances​​. “These can add up really quickly, and then you'll end up paying more than you were prepared to. Besides, water is usually free at restaurants; not only is it cost-effective, but it's also healthier.” 

Stick to iced tea: Alcohol can add a lot to the final tab. Since the markup on alcohol at restaurants runs 400-500%, one option may be to pass on the restaurant's wine or cocktail list. If you are going to imbibe, it's much more economical do to so at home.

Stop “splitting” the bill: “If you're tired of always feeling like you're overpaying when you dine out with friends, consider paying for what you order,” UNSTUCKKD CEO Kahlil Dumas suggests. “If you're out at a restaurant or bar with a group of people, don't just split the bill evenly. Instead, pay only for what you consumed. This will ensure that you're not paying for someone else's expensive meal or drinks, which can add up over time.”

The cost of living was significantly higher in April than it was in March. The Bureau of Labor Statistics reports the Consumer Price Index (CPI) rose 0.4% last month after gaining only 0.1% in the previous month.

Consumers paid more for shelter, gasoline, and used cars and trucks. Those increases more than offset the declines in some other sectors.

Areas where consumers paid more

• Used cars - up 4.4%

• Energy - 0.6%

• Medical care commodities - up 0.4%

• Shelter - up 0.4%

• Restaurants - up 0.4%

• Gasoline - up 0.3%

• Apparel - up 0.3%

Areas where consumers paid less

• Natural gas - down 4.9%

• Fuel oil - down 4.5%

• Electricity - down 1.7%

• New cars - down 0.2%

• Transportation - down 0.2%

• Groceries - down 0.2%

With the winter heating season pretty much over, consumers saw big drops in natural gas and heating oil prices. Food costs, one of the heavier burdens for consumers over the last few months, continued to moderate.

The food index was unchanged in April, with higher menu prices at restaurants but lower prices at the supermarket. When it was averaged out, food costs were flat last month.

Four of the six major grocery store food group indexes decreased over the month. The index for fruits and vegetables fell 0.5% while the index for meats, poultry, fish, and eggs declined 0.3%.

The dairy and related products index decreased by 0.7% percent in April as the milk index fell 2.0%, the largest decline in that index since February 2015.

Over the last 12 months, the nation’s inflation rate is 4.9%. That’s down from June’s peak of 9% and closer to the Federal Reserve’s goal of 2%.

In its March Consumer Price Index report, the Labor Department found inflation was continuing to fall. The year-over-year inflation rate was 5%, still high but down significantly from its 9% peak in June.

In recent weeks, as publicly traded corporations have reported their first-quarter earnings, some major brands told investors they were able to raise prices and not see much pushback from their customers.

For example, consumer products giant Procter & Gamble said it raised prices across its entire portfolio of products by 10%. It said consumers more or less accepted the price hikes as sales volumes fell by only 3%.

Consumers paid higher prices for everything from Pampers diapers to Pantene shampoo. The company said sales of Tide detergent went up, even though the product cost more.

A more expensive Coke

It was the same story for Coca-Cola, which this week reported sales and earnings that beat forecasts. During the quarter Coke continued to raise prices of its products to offset the effects of inflation.

But the impact of higher prices on company earnings was small. Coke’s unit case volume actually grew 3% in the quarter, even though sales in North America were flat.

McDonald’s is another major brand that has aggressively hiked prices. Even though company officials told investors that they were seeing some pushback from customers, that wasn’t reflected in the company’s finances. 

Higher prices aren’t keeping people out of McDonald’s

McDonald’s first-quarter earnings and revenue were higher than expected. Store traffic was up for the third straight quarter while some competitors experienced a dip in business.

In response to The Sun newspaper’s report on price increases in the UK, a McDonald’s spokesman said inflation continues to affect the company and its suppliers.

"We carefully review and adjust our prices to ensure that while some prices may change, we maintain great value and quality across our menu," the spokesman said.

In the U.S., McDonald’s has taken some social media heat for its prices. A TikTok video that went viral shows the menu board at a McDonald’s in Connecticut where the price of a Big Mac Combo Meal was $16.89. 

Lisa, of Cocoa, Fla., has also noticed higher prices at McDonald’s.

“My chicken sandwich looked like 2 chicken nuggets thrown on a bun with a pickle nothing else for twice as much as what we use to pay,” Lisa wrote in a ConsumerAffairs review. Disgusting!

Consumers continued to pay more to put a roof over their heads in March but food prices appear to have peaked, at least for now. The Labor Department’s Consumer Price Index (CPI) rose just 0.1% last month, for an annual inflation rate of 5%.

The cost of shelter was by far the largest contributor to the monthly all-items increase in inflation. It more than offset a decline in the energy index, which fell 3.5% over the month as all major energy component indexes declined. The food index was unchanged in March.

The shelter index reflects rents as well as home ownership costs. The cost of shelter rose 0.6% from February and is rising at an annual rate of 8.2%.

As noted, energy prices tumbled thanks to the slide in gasoline prices. Gas prices fell 4.6%  in March and are down more than 17% year-over-year. That good news is tempered, however, by sharp increases in prices at the pump so far in April.

Perhaps the best news in the report concerns food prices. In March, overall food prices were unchanged from February, when prices rose 0.4%. For the first time since inflation took hold of the U.S. economy the cost of food purchased at grocery stores and consumed at home went down, falling 0.3%. For the last 12 months, those costs are up 8.4%.

Eating at restaurants, meanwhile, continued to get more expensive. The cost of food consumed away from home increased by 0.6% and is up 8.8% since March 2022.

Egg prices finally fall

Breaking down grocery costs, three of the six major grocery store food group indexes decreased in March. The index for meats, poultry, fish, and eggs fell by 1.4%. Eggs were also a lot cheaper, with prices falling nearly 11%.

The fruits and vegetables index declined by 1.3% over the month, and the dairy and related products index decreased by 0.1%.

The gap continued to widen last month between new and used cars. Used car prices fell another 0.9% while the cost of new cars and trucks rose 0.4%. Over the last 12 months, the price of used vehicles has fallen 11.2% while new car prices have risen 6.1%.

Consumers continued to pay more for car insurance last month with premiums rising 1.2%. Travel also got more expensive with airfares rising by 4%.

So far in 2023, there has been plenty of economic turmoil. From inflation to layoffs to bank failures, many Americans are on edge.

An early-year stock market rally has faded while gold and Bitcoin prices have surged, as many investors seek a safe haven. But of the two, which is the better hedge against inflation?

While the experts we consulted have well-thought-out views on the subject, investors should never make big financial decisions without doing their own research and consulting with a trusted and objective financial adviser.

Richard Gardner, CEO at Modulus, says gold has a historic record and it has been used as a store of value for thousands of years. That’s his choice.

“It is, reliably, a hedge against inflation because it is a physical commodity that is scarce, meaning that it is difficult to manipulate,” Gardner told ConsumerAffairs. “Because the supply of gold is limited, it has historically held up quite well against fiat currency, which can be printed at will. It is a favorite investment for risk-averse investors.”

Gold is approaching a record high in price, trading this week at around $2,020 an ounce. Gardner said he thinks gold is the better hedge because there isn’t enough data on how cryptocurrencies hold up over time.

Bitcoin, on the other hand...

Marius Grigoras, CEO at BHero, takes the opposite view. While he acknowledges that gold has served as a trusted store of value in the past, he thinks Bitcoin has emerged as a more efficient and accessible alternative.

“Bitcoin offers anonymity, security, and accessibility without physical constraints,” he told us. “Its scarcity, fixed supply, and immunity to government manipulation position it as an attractive deflationary asset. Furthermore, Bitcoin's potential for appreciation, as demonstrated by its remarkable growth over the past decade, outpaces gold's returns, making it an enticing option for wealth protection.”

However, Bitcoin has been more volatile than gold. After soaring to a price above $60,000 the cryptocurrency plunged to below $20,000. In the wake of recent bank failures it has enjoyed a rally, taking the price back to $30,000.

Doesn't like either one

Jack Prenter, CEO of DollarWise, isn’t a fan of either gold or Bitcoin as a hedge against inflation.

“For an asset to be a good hedge against inflation you would want to see decades of data that show strong protection of purchasing power over multiple market cycles and in different rate environments, and we don't have that data for Bitcoin because it's so new,” he told us.

“Gold is often touted as a strong inflation hedge, but the data shows that in the short and medium-term gold doesn't act as a good hedge.”

Prenter notes that from 1980 to 1984, the price of gold fell by about 10% while annual inflation ran at 6.5%. He maintains that over the last  50 years, gold has had a weak correlation to inflation. 

“Only when you look at a timeline of a century or longer is gold a reasonable hedge against inflation,” Prenter said.

Consumers paid more for food and shelter last month but the cost of heating homes fell sharply. The Labor Department’s Consumer Price Index (CPI) increased by 0.4% after a 0.5% rise in January.

Natural gas prices plunged 8% last month but are still 14% higher than 12 months ago. The cost of fuel oil dropped 7.9% while remaining 9.2% higher than a year ago.

The cost of electricity rose last month, but not by much. Electric bills were 0.5% higher than in January but consumers are paying 12.9% more for electricity than in February 2022.

Motorists also saw another small increase in prices at the pump. The cost of gasoline was up 1% over January but compared to 12 months ago, gas prices were down 1.2%.

Food costs rose 0.4% in February, perhaps causing consumers the most inflationary pain. It was still cheaper to eat at home last month. The price of food purchased at a store and consumed at home rose 0.3% while food consumed at bars, restaurants and convenience stores rose 0.4%. Overall food costs were 9.5% higher than a year ago.

High cost of shelter

There was also little relief for people renting an apartment or buying a home. Shelter costs rose 0.8%, slightly more than in January. 

Used car prices continued to fall last month, registering a 2.8% decline, and were 13% cheaper than a year ago. New vehicle prices continued to rise as dealers continued to mark up cars and trucks over the sticker price.

Taking everything into consideration, consumer prices are 6% higher than they were a year ago, well off their peak last June.

It might not seem like it to many consumers but inflation continues to slow down. Prices went up last month but at a slower rate than in December.

The Labor Department’s Consumer Price Index (CPI) increased 0.5% from December to January, slower than the 1% rise between November and December. On a year-over-year basis, the CPI rose 6.4%.

Americans buying and renting homes felt the biggest impact. The shelter index rose 0.7% and is up 7.9% over the last 12 months. 

According to the Bureau of Labor Statistics, the index for shelter was by far the largest contributor to the monthly all-items increase, accounting for nearly half of the increase.

Gasoline prices, which had fallen during November and December, started going up again last month. Prices at the pump jumped 2.4% last month after falling 7% in December. Over the last 12 months, however, gas prices are only up 1.5%.

Food also fed inflation

Food prices also fed inflation last month. Overall food prices were 0.5% higher in January and were up 10.1% year-over-year. 

The price of food purchased at the grocery store and consumed at home rose 0.4% in January while food consumed away from home – mostly in restaurants – was even more expensive, rising 0.6% from December.

Services were generally more expensive last month – a fact that takes on added significance because the Federal Reserve’s rate-raising policy is aimed at bringing those costs down. The cost of services was up 0.5% and is 7.2% higher than in January 2022.

Medical services proved to be an exception. That cost declined by 0.7% and is up only 3% in the last 12 months.

Used car buyers also caught a break last month. As new car prices continued to rise, the average price of used cars and trucks fell by 1.9% and is 11.6% lower than a year ago.

If you’ve adjusted your breakfast menu in the last year because of the high cost of eggs, you should soon be able to get back to your regular morning routine. The wholesale price of eggs has plunged in recent weeks.

This week the wholesale price of a dozen eggs dropped to $2.61. That’s more than 50% lower than mid-December’s average price of $5.43. According to the market research firm Urner Barry, egg prices have plunged by 47% so far this year.

Consumers probably haven’t noticed, however. That’s because there is a lag in the time that a wholesale price is reflected in prices at the supermarket. 

In fact, retail egg prices were still extremely high throughout December. According to the Labor Department’s Consumer Price Index (CPI), the price consumers paid for eggs was up over 11% from November. During all of 2022, retail prices soared by 60%.

Last spring a particularly strong form of avian flu decimated domestic chicken flocks. The outbreak flared up again last fall, killing millions of chickens and driving prices even higher.

Egg production is up, but so are producers’ costs

Industry analysts say chicken flocks are rebounding and that’s bringing down prices. However, they point out that producers face higher costs in other areas.

“Everything we buy, from cartons and boxes and freight and fuel, pretty much every input we purchase went up in cost in 2022," John Brunnquell, CEO of Egg Innovations, told Wisconsin Public Radio.

Brunnquell said the avian flu caused the deaths of around 38 million laying hens across the U.S. last year, though government health officials put the number closer to 58 million. Much of 2022’s price surge was simply a supply and demand issue.

Now that wholesale egg prices are on a downward slope, just when will shoppers see lower prices for a carton of eggs at the grocery store? Maybe within weeks, experts say.

How low will egg prices get?

How low will prices fall? That’s less certain. In a way of comparison, a dozen large Grade A eggs cost consumers $4.25 on average in December, more than double the $1.79 retail price a year earlier, according to government data.

While Brunnquell and other egg producers are facing higher costs they may find they must aggressively lower prices to sell eggs to a public that has lately changed its menu to avoid high prices.

“Consumer demand for shell eggs continues to track lower and is below average and below the levels recorded a year ago,” the U.S. Department of Agriculture noted last week. “Resistance to record high prices in grocery outlets across the country continues to slow shell egg movement.”

With raging inflation, volatile gas prices, rising mortgage rates and a collapsing housing market, 2022 was packed with important consumer news. Our coverage drew attention, not only from readers but also other media outlets.

For example, in July when home prices were at their peak, we explained what it means to be “house poor.” Two thousand other websites linked to the piece, which was designed to help would-be homebuyers understand all the costs associated with homeownership.

We also helped consumers better understand and care for the technology they use every day. In June we reported “The hot summer heat plays havoc not only with people, but smartphones too.” Among the advice we offered was a list of apps that monitor how much heat your device is absorbing. Three hundred thirty-two other media outlets linked to the story to help their readers.

Our coverage of scams also drew a lot of interest during the year. In March we reported “The ‘Zelle scam’ is spreading quickly across the U.S.” Since then scams involving the peer-to-peer payment app have multiplied, victimizing thousands of people. 

Consumer products, good and bad

Our coverage of consumer products, both good and bad, also drew a lot of interest. In April we reported that “Benjamin Moore ranks first with consumers doing interior paint jobs,” based on a survey by J.D. Power and an analysis of ConsumerAffairs reviews.

“I recently painted over a damaged surface with a Benjamin Moore light pastel over old dark red paint,” Trina, of Burbank, Calif., wrote in a ConsumerAffairs review. “It only took a few coats and now the walls look almost professionally done even though I'm an amateur. I highly recommend this paint.”

Stories about privacy were also front and center during the year as several large companies reported data breaches. Even non-profits were not immune to hackers. We started the year telling readers that Goodwill suffers another customer data hack, a story linked by 41 other sites.

Also in January, our story reporting that Vanilla Prepaid gift cards trigger a string of post-holiday complaints created a lot of interest, especially since so many consumers ran into the problem. 

“I bought a $100 Visa Card gift card a few weeks before Christmas, and I still can not use it,” Irina, of Wylie, Texas, wrote in a ConsumerAffairs review. “First of all, I was unable to access my card balance or register it. After trying repeatedly to access my card with no result, I called customer service on the back of the card and I was told that my card was deactivated for security reasons.” 

Andrea, of Buffalo, N.Y., had an even more intriguing experience. After buying a $100 gift card for her son, the card had a zero balance. She says she was told that right after the card was activated, the funds were withdrawn and used to register an internet domain. 

A surge in gas prices

All year long we covered the rapid rise in gasoline prices and the impact it was having on consumers. During the pandemic, when gas was cheap, the sale of recreational vehicles (RV) soared as Americans hit the road. But at the end of March, we reported “High gas prices have RV campers changing their plans.”

In 2021 we covered the rise of Bitcoin. In 2022 we covered its fall. In May we reported “Bitcoin's value continues falling to under $27,000.” That was in May. It’s now around $16,000.

The rise of mortgage rates this year turned the housing market upside down. Suddenly, record-high home prices kept many would-be buyers as renters. In April, 155 other sites linked to our story “More homeowners associations are seeking to limit rentals.”

It was a  record year for recalls, especially automotive recalls. Manufacturers recalled millions of vehicles for everything from lethal airbags to faulty backup cameras. “These cars haven’t been recalled, but maybe they should be” featured cars that haven’t been recalled but their owners have reported problems.

Prospective homebuyers hoping for a big drop in home prices may have a longer wait. The Labor Department’s November Consumer Price Index (CPI) shows housing costs, which include rent, are still rising.

In fact, the report says the index for shelter was by far the largest contributor to the monthly 0.1% increase in the CPI. The cost of putting a roof over your head increased 0.6% from October, even though home sellers in many housing markets have cut their asking price.

For the year, housing costs have increased by 7.1%, making a home purchase much more difficult for many because interest rates have also risen.

Food costs are also rising

Food costs also continued to rise last month. The food index rose by 0.5% last month, slightly less than October’s 0.6% rise. Over the last 12 months, food costs have risen by 10.6%.

Where you buy food continues to make a difference in what you pay. The cost of food purchased at the grocery store and consumed at home has risen 12.1% over the last 12 months. The cost of restaurant meals is up just 8.5% on an annual basis.

Food has been a consistent inflation driver and has had an outsized impact on household finances. Four of the six major grocery store food group indexes increased in November. 

The index for fruits and vegetables increased 1.4%, a sharp rebound from October’s 0.9% decline. The price of cereals and bakery products rose 1.1%, slightly higher than the 1% increase in dairy products.

Egg prices are finally coming down

But there was some relief at the supermarket last month. The cost of meats, poultry, fish, and eggs fell 0.2% over the month after rising 0.6% in October. The prices of beef and pork were also lower last month.

Offsetting higher prices for food and shelter, the cost of energy plunged 1.6% last month, helped by a 2% decline in the price of gasoline. According to AAA, the national average price of regular is now $3.24 a gallon, nine cents a gallon less than a year ago.

Natural gas and electricity costs were also cheaper in November, defying mid-year forecasts that winter heating costs could hit record highs. So far, at least, that appears less likely.

The cost of used cars and trucks continued to fall after reaching record highs earlier this year. Used vehicle prices fell 2.9% in November and are down 3.3% over the last 12 months.

The cost of living rose again last month, but not as much as expected. The Labor Department reports the Consumer Price Index (CPI) rose 0.4% from September – 7.7.% over October 2021.

When the government stripped out costs of food and energy, prices rose 0.3%, half the rate of September’s rise. But that doesn’t mean consumers didn’t feel some pain, especially in certain sectors.

The shelter index, which covers rent and mortgage costs, accounted for over half of the monthly all items increase. Rents continue to rise and mortgage rates moved sharply higher during the month.

Here are some other consumer items that cost more last month:

• Gasoline prices rose 4% from September, 17.7% from October 2021

• Electric bills rose 0.1% from September, 14.1% from October 2021

• Food prices rose 0.6% from September, 10.9% from October 2021

Huge increase in heating oil prices

Consumers who heat with oil and filled their tanks last month got hit the hardest. The price of heating oil jumped 19.8% from September and 68.5% from October 2021.

While overall food costs continued to rise, eating away from home got a lot more expensive. Food consumed away from home rose 0.9% from September and 8.6% over the last 12 months. Food consumed at home rose 0.4% over the last month but the cost is up 12.4% since October 2021.

Some things consumers buy actually came down in price. The price of used cars and trucks continued to fall from its record high, declining 2.4% over the last month and is now just 2% higher than a year ago. New vehicles, meanwhile, rose 0.4% and cost 8.4% more than a year ago.

Clothing costs were also lower last month as retailers slashed prices to reduce inventory. Apparel costs fell 0.7% but are up 4% year-over-year.

Medical costs were also lower in October. Costs fell 0.6% from September but are up 5.4% from a year ago.

Consumers probably won’t be surprised to learn that inflation continued at a hotter-than-expected pace last month.

The Labor Department reports the Consumer Price Index (CPI) rose 0.4% from August to September and is up 8.2% over the last 12 months. Many basic costs consumers pay continued to rise.

For example, food costs rose 0.8% in one month, matching August’s increase. Over the last 12 months, the cost of food has risen 11.2%.

Breaking it down, the cost of food purchased at grocery stores and prepared at home was up 0.7%, also matching August’s increase. Year-over-year, supermarket food costs are up 13%.

The cost of fruits and vegetables was the biggest driver, rising 1.6% in one month. The cost of cereals and bakery products increased by 0.9% in September.

The index for meats, poultry, fish, and eggs rose at a slower pace, gaining 0.4% in the last month. The same is true of dairy products, which rose 0.3%.

Dining out got more expensive

Restaurants are beginning to catch up. The cost of food consumed away from home rose 0.9% in September and is 8.5% higher over the last 12 months.

In the food away-from-home category, the index for full-service meals increased by 0.4% and the index for limited-service meals increased by 0.6% over the month. 

Housing costs remained elevated last month but at least didn’t increase. The cost of shelter rose 0.7% in September, the same as August. The cost of putting a roof over your head is up 6.6% over the last 12 months.

The cost of medical care services – things like doctors' office visits – slowed considerably last month, rising just 0.1%. Those costs were up 0.8% in August and are 6.5% higher on the year.

Used car prices are coming down to earth

While new car prices continued to rise, the price of used cars and trucks continued to fall, dropping another 1.1% last month. For the year, however, used vehicle prices are up 7.2%.

Consumers also paid less for gasoline last month. The cost of gas was down 4.9% in September but is still 18.2% higher than a year ago. 

With winter on the way, other energy costs continue to rise. The cost of electricity gained 0.4% while natural gas costs surged 2.9%.

If you’re struggling to pay bills amid rising inflation, you have plenty of company. A new LendingTree survey found an increasing number of consumers are late paying at least some bills.

In fact, 32% of Americans said they have paid a bill late in the past six months and 61% of them said it’s because they didn’t have enough money to cover the costs. Sixty-four percent of women were in that camp as opposed to 57% of men.

Utility bills were the most likely to go unpaid, or paid late. Close behind were credit card bills and the internet or cable bill.

All in all, 40% of Americans said they’re less able to afford their bills than a year ago, not surprising since inflation really took off in early 2022. Overall, 62% of Americans struggle to pay at least one bill.

Consumers are feeling the pain

When ConsumerAffairs analyzed recent consumer reviews, it was clear that inflation is a growing concern. For all types of companies, 82 reviews  since the beginning of June mentioned the word “inflation.”

Tonda, of Winston Salem, N.C., told us her Allstate Insurance bill went from $170 a month to $236 in 18 months. When she called to ask why, she didn’t like the answer.

“He had the nerve to say ‘inflation went up.’ I have never heard anything like that from any insurance company I have ever dealt with,” Tonda wrote in a ConsumerAffairs review. 

Actually, a lot of insurance customers have been getting that same message lately. When the Bureau of Labor Statistics reported August’s Consumer Price Index (CPI) it showed that car insurance rates jumped 1.3% from July to August.

‘Shrinking margin for error’

“Life is getting more expensive by the day and it’s shrinking Americans’ already tiny financial margin for error down to zero,” said LendingTree’s chief credit analyst Matt Schulz. “Unless they’ve been able to increase their income, millions of Americans have had to make sacrifices because of inflation to pay the bills. Perhaps the worst part is that inflation likely isn’t going anywhere anytime soon. That means that short-term quick fixes won’t cut it.”

In August, rent appeared to be the biggest contributor to inflation as home purchase prices eased. New and used car prices were down somewhat but rising interest rates have sent monthly payments into record territory.

With improvements in the supply chain recently food prices aren’t going up as much. Globally, the United Nations reports food inflation has actually declined over the last six months. Experts, however, don’t expect them to fall anytime soon.

We’ll get the next gauge on inflation when the government releases the September CPI later this week.

Investors, especially those with large amounts of cash in their portfolios, may be wondering where to put money to work in an environment where the Federal Reserve is raising interest rates and the stock market and real estate are falling.

At its September meeting, the Fed raised a key interest rate another 0.75%, sending stock prices swooning. But as the price of assets like stocks and real estate goes down, the interest rate investors can get on their money has been going up.

After the Fed’s latest rate hike the yield on the Treasury Department’s two-year bond rose past 4% and, as of this writing, is still climbing. Savers, who have received almost nothing on their cash for nearly two decades, can invest in these bonds, which are backed by the full faith and credit of the U.S. government, and are guaranteed to get their money back in two years – along with a 4% profit.

I Bonds now pay 9.6%

An even higher-paying alternative is the Treasury Department’s I Bond, which is keyed to the inflation rate and currently pays an eye-popping 9.6%. Officially called the Series I Savings Bond, this savings instrument pays a fixed rate of return, along with a higher rate that is calculated on the rate of inflation and reset every six months.

“A combination of a fixed rate that stays the same for the life of the bond and an inflation rate that is set twice a year,” the Treasury Department said on its website. “For bonds issued from May 2022 through October 2022, the combined rate is 9.62%.”

According to Investors Business Daily, when the rate adjusts at the beginning of November, it’s expected to fall to 6% – still higher than most regular bonds. But before considering investing in an I Bond, here are some things to know:

Things to know

• Individuals can purchase up to $10,000 in I Bonds each calendar year

• You must hold the bond at least 12 months before cashing in. You will receive the original purchase price plus interest earnings

• If you redeem an I Bond within the first 5 years, you'll lose your last 3 months of interest. For example, if you redeem an I Bond after 18 months, you'll receive the first 15 months of interest

•  I Bonds can't be purchased and held in a traditional or Roth IRA. The I bonds have to be held in a taxable account

• The interest and principal are paid to you when you cash the bond.

Before undertaking any kind of financial investment, it is always wise to carefully research the investment before acting. In this case, a good place to start is Treasury Direct, a U.S. government website.

In most cases, it will be helpful to seek the counsel of a knowledgeable and objective financial adviser.

For the last few months consumer prices, as tracked by the U.S. Labor Department, have been shooting higher. In August, consumer prices were up 8.3% year-over-year.

So it might seem odd that a respected voice on Wall Street has since last year consistently warned that deflation – falling prices – is the bigger threat.

Cathie Wood, who heads the ArkInvest hedge fund, is sticking to her guns even as prices rise. Now, some other investors are starting to see it her way too. In recent days Tesla CEO Elon Musk and Jeffrey Gundlach, CEO of Doubleline Capital, have echoed her comments.

In a nutshell, here’s Wood’s hypothesis: Prices are rising now because of problems with supply. There still aren’t enough new cars, for example. But long term, she says that’s not a lasting trend.

Wood’s hedge fund invests mostly in growing technology “disruptors,” companies that shake up existing industries, like the way streaming is eating away at the cable industry. As these companies continue to grow, and as artificial intelligence (AI) is brought on line, Wood says the deflationary trend that actually began more than two decades ago, will pick right up again.

A mistake?

Wood -- and now Musk and Gundlach -- argue the Federal Reserve is making a huge mistake by continuing to hike interest rates to reduce inflation. All three worry that policy will throw the U.S. economy into a recession, reducing consumer demand precisely at the point when prices begin to fall.

“We are getting some loud voices now accompanying us on this deflation risk,” Wood said at an investor event this week. 

Musk and Gundlach have also been speaking out. Musk tweeted that the Fed should lower its key interest rate by 0.25% instead of raising it, noting that commodity prices, such as lumber and copper are well below their recent highs.

An economist weighs in

At least one economist has also joined the chorus. Writing in Politico, David Blanchflower, an economics professor at Dartmouth College, says the current Fed policy is “guessenomics, based on zero data.”

“More plausibly this path (of continuing to raise interest rates) leads to a hard landing with rising joblessness and an unnecessarily destructive economic recession,” Blanchflower writes and goes on to call for the Fed to cut, not raise interest rates. 

Fed policymakers meet next week and are expected to announce another rate hike of at least 0.75%, taking the effective federal funds rate to between 2.75% to 3%. An increase in the federal funds rate usually results in higher consumer rates on credit cards and auto loans.

The Fed’s money-tightening policy is one reason stocks – especially companies that are growing but not yet profitable – have suffered in recent months. Any sign that the Fed is considering a reversal of its present policy is likely to send the market higher.

Inflation remained as hot as the August weather last month as prices paid by consumers rose more than expected.

The Labor Department reports the Consumer Price Index (CPI) increased 0.1% in August after being flat the month before. On a 12-month basis, consumer prices rose 8.3% – up from July’s 8.1%.

It might seem like a small increase but government economists were hoping the index would actually go down. After all, gasoline prices have been steadily falling for weeks. 

The price at the pump fell 10.6% last month. But consumers were spending more money elsewhere, especially at the grocery store.

Food costs were sharply higher

The cost of food prepared at home rose 0.7% from July to August and is up 13.5% over the last 12 months. For the first time, the cost of food purchased in restaurants rose even faster, gaining 0.9% in one month.

Because food and energy prices tend to be volatile, economists remove them from the equation and look at the “core” rate of inflation. In August, the core rate was up 0.6%, a larger increase than in July and a worrisome trend should it continue.

The cost of housing, medical care, household furnishings and, operations, new vehicles, motor vehicle insurance, and education were among those that increased over the month. There were some costs that declined in August, including those for airline fares, communication, and used cars and trucks. 

Here’s how those one-month cost increases break down:

• Shelter - up 0.7%

• Medical care services - up 0.8%

• Household furnishings - up 1%

• New vehicles - 0.8%

• Car insurance - up 1.3%

• Education - up 0.5%

A few costs were lower

There were only a few areas where consumers paid less last month, led by gasoline, which was down 10.6% from July to August. Air fares also dropped dramatically, declining 4.6% following July’s 7.8% decline. 

The price of used cars and trucks continued to fall from its June peak. The used vehicle index declined 0.1% in August after falling 0.4% in July.

When the Federal Reserve issues its annual "Economic Well-Being of U.S. Households” report it always measures how many households have enough cash on hand to meet an emergency $400 expense.

But these days, very few emergency expenses cost just $400. LendingClub Corporation, in partnership with PYMNTS.com, has issued its own state of American households report and finds the Fed’s calculations are seriously out of date.

The report found that 46% of U.S. consumers have faced at least one unexpected expense in the last 90 days, with 56% of those emergency expenses costing more than $400. In fact, consumers' average emergency expense was more than triple that -- approximately $1,400.

"The need to update the $400 emergency expense benchmark is evident in this report," said Anuj Nayar, LendingClub's financial health officer. "Inflation in the last year, let alone the last decade, has made it much more difficult for consumers to save while staying on top of their expenses.”

The report confirmed recent findings that well over half of U.S. households live paycheck-to-paycheck. By spending everything they make, even upper-income households are saving little to nothing each month.

‘Difficult road ahead’

“Not only are consumers saving less every month, but they are likely to encounter an emergency expense, if not multiple, putting them at a greater risk for increased financial hardship,” Nayar said. “This fact paves a financially difficult road ahead for consumers."

After quizzing consumers about their unexpected bills, the researchers found very few expenses were under $400. Emergency expenses in 2021 averaged around $1,400 with high-income households and those actually saving money each month reporting even high unexpected expenses.

“With rising inflation and the increased cost of emergency expenses, the Federal Reserve's indicator of financial distress for over a decade is losing relevance,” the researchers write.   

High-income households might have more assets to draw upon to meet an unexpected bill. Middle to lower-income households are less likely to have that option, having to resort to credit cards or other high-interest loans.

After reporting that it netted $3 billion in the second quarter, Lowe’s has decided to thank its hourly front-line associates with some of that profit – and in no small way, either.

"In recognition of some of the cost pressures they are facing due to high inflation, we are providing an incremental $55 million in bonuses to our hourly frontline associates this quarter," said Lowe's CEO Martin R. Ellison.

"These associates have the most important job in our company and we deeply appreciate everything they do to serve our customers to deliver a best-in-class experience."

These bonuses couldn’t come at a better time. With inflation continuing to sting Americans everywhere they turn -- from rent to car prices -- a little extra help in offsetting the current cost-of-living is a welcome gift. Lowe’s isn’t the only major company offering inflation-damping bonuses.

ExxonMobil, Microsoft, Walmart, T. Rowe Price, USAA, and others have also offered everything from gift cards to pay raises to help their workers make ends meet. 

With the cost of living rapidly rising, the number of Americans who live paycheck-to-paycheck appears to be rising just as fast.

LendingClub Corporation, in partnership with PYMNTS.com, has released its periodic study of consumer spending patterns and found that 61% of consumers spend all of their money between pay periods. That’s up from 52% a year ago.

According to LendingClub, living paycheck-to-paycheck is the most common financial lifestyle in the U.S., with increasingly more high-income consumers now entering that category. However, the researchers also report that an estimated 33.5 million U.S. consumers – about 13% – actually spent more than they earned in the past six months by tapping savings or going into debt.

Inflation is a complicating factor

After the lowest income group, the survey shows that higher-income households are the most likely to barely scrape by. The biggest rise in paycheck-to-paycheck living occurred among consumers in households that earned between $100,000 and $150,000. Paycheck-to-paycheck living rates were up11% year-over-year in May 2022, and were at 52% in June 2022. That period coincides with a jump in the inflation rate.

"What a difference a year makes. Last summer we were all worried about how quickly the economy would recover. Now, as inflation continues its upwards swing, consumers are finding it more difficult to manage spending and are eating into their savings as financial pressures mount," said Anuj Nayar, LendingClub's Financial Health Officer. 

The survey found that 77% of households earning less than $50,000 a year were living paycheck-to-paycheck in June, which should come as no surprise. However, that’s a slight improvement from April when 79% of those households were in that category.

The generation that lived through the Great Depression had the highest savings rate of any modern demographic. Today, even high-wage-earners are more likely to spend all their money between paychecks.

A slight improvement in savings

Consumers in households that earn more than $200,000 a year are the only ones that actually saved a little more in June than in April. That group is also the most likely to have investments in stocks and bonds, and half of all investors reported their portfolios losing money in the last three months.

But even with declining assets and rising prices, Nayar says there is no evidence that consumers are slowing their spending habits. This could make them more financially vulnerable.

“Not only is it going to be difficult for them to handle future emergency expenses, but even foreseen payments like education, student loans, or housing expenses may be harder to balance for the everyday American consumer," Nayar said.

Large companies that sell products to consumers have a strategy for dealing with inflation. They’re passing higher costs on to their customers.

In recent days, major consumer brands such as Coca-Cola, McDonald’s, Unilever, and Kimberly-Clark reported second-quarter earnings. They all said they are willing to see sales go down slightly as long as they make more per sale. For example, McDonald’s has just announced it is increasing the price of its cheeseburger in the U.K. for the first time in 14 years. 

Unilever makes Dove shampoo and Ben & Jerry’s ice cream. The company recently reported that it has increased prices by an average of more than 11% on all of its products.  Kimberly-Clark makes Huggies diapers and Cottonelle toilet paper, and it reports that it has raised prices by an average of 9%.

Amazon has announced it is increasing the price of a Prime Membership in the U.K. and Europe. U.S. customers saw the cost of their Prime membership rise in February, so they may be safe – at least for a while.

Selling less but making more

Unilever reported that its sales dipped by 2.1% in the second quarter. But company officials said the sales decline was offset by increased prices for its products.

“We are pricing ahead of the market, and we’re prepared to tolerate low-single-digit volume declines and some compromise on competitiveness for a limited period of time in order to land that price,” Unilever CEO Alan Jope told the Wall Street Journal.

However, not all consumers are reacting the same way to rising prices. McDonald's officials have noted that many customers haven’t changed their habits, but lower-income consumers have “traded down” by ordering fewer combo meals and choosing more items from the “value menu.”

Switching to store brands

Many consumers are also pinching pennies at the grocery store. The Food Industry Association’s 2022 Power of Private Brands report shows that 40% of American consumers have bought more store brands since before the pandemic.

With inflation cutting into their spending power, nearly 75% of these shoppers plan to continue taking this route. More than half say they have switched to private brands because they are less expensive.

Federal Reserve policymakers are concerned about the toll that rising prices will have on consumer sentiment. This week, the Conference Board reported that consumer confidence declined in July for a third straight month.

“Concerns about inflation – rising gas and food prices, in particular – continued to weigh on consumers," said Lynn Franco, senior director of Economic Indicators at The Conference Board. 

Consumers who rented homes in June encountered sharply higher costs for shelter. The cost of renting pushed the Consumer Price Index (CPI) up last month to the fastest rate since 1986.

The part of the CPI that measures rent increased by 0.8% from May to June. Over the last 12 months, rent prices have increased by 5.8%.

Economists warn that rental costs will probably keep going up because so many people who would like to purchase a home have been priced out of the market by sharply higher mortgage rates.

“As a result of historically low housing affordability, many Americans have moved into rental properties in an effort to wait out the housing market, limiting demand,”  Chase Gardner, a researcher at Insurify, told ConsumerAffairs. “While rent prices are also rising across the country, they aren’t growing at quite the rate that home prices have over the past several years, so renting remains a better housing option for many Americans.”

That’s especially true in expensive housing markets like New York and San Francisco. But a new report from the Harvard Joint Center for Housing Studies points to rising rents as another pressure point for consumers coping with rising inflation.

Rents rose 12% in the first quarter

The report found that rents were up 12% in the first quarter of 2022, with increases in several metro areas exceeding 20 percent. 

“Rents for single-family homes rose even faster, pushed up by increasing demand for more living space among households able to work remotely,” said Daniel McCue, a senior research associate at the Center. “Adding to the pressure, investors moved aggressively into the single-family market over the past year, buying up moderately priced homes either to convert to rental or upgrade for resale.”

Gardner says a recent Insurify study on the relative affordability of renting vs. buying a home in hundreds of U.S. metropolitan areas found that housing prices can vary more extremely than rent prices city-to-city.

“So home values in an expensive location are likely to be disproportionately higher than expensive rent prices when comparing each to their respective national average,” he said.

In more affordable markets like Montgomery, Ala., or Memphis, Tenn., Gardner said purchasing a two-bedroom home may be more affordable than renting one.

If you're interested in learning more about which states offer the best prices for renting, check out ConsumerAffairs' guide here.

Inflation roared ahead in June, rising 1.3% from May and 9.1% over the last 12 months. The Labor Department’s Consumer Price Index (CPI) showed higher costs in just about every sector of the economy.

Not surprisingly, the indexes for gasoline, shelter, and food were the biggest drivers of inflation last month. The energy sector was up 7.5% and contributed to nearly half of the increase. Within the energy category, gasoline was up 11.2%.

In comparison, food prices were fairly subdued. The food index rose 1% from May. Over the last 12 months, food purchased in grocery stores is up 12.2% while food consumed away from home, such as at restaurants, has increased far less – by 7.7%.

The cost of a new vehicle rose 0.7% from May to June. At the same time, the price of a used car or truck increased at more than twice that rate – 1.6%.

‘Pretty sticky’

Inflation has been rising at an increasing pace since the start of 2022. Chris Motola, economic and financial analyst at MerchantMaverick.com, says the underlying causes of inflation may not disappear soon.

“It's pretty sticky from the looks of it,” Motola told ConsumerAffairs. The (Fed’s) rate hikes may cause some demand destruction, but remember that a lot of the problems are still on the supply side. In aggregate, though, we're looking at elevated prices for the foreseeable future.”

“No one can predict how long the record-high inflation rates will last, but we know now by now that it isn't transitory,” Mark Spitz, CEO at CPI Financial, told us. “The ongoing war in Ukraine coupled with the pandemic lockdowns that are resurfacing in various parts of the world means that the food production and energy sectors will continue to get rocked.”

Motola says resolving the nagging issues in the supply chain will do more to bring inflation under control than a Fed policy of raising interest rates.

“Rate hikes may make a small dent while playing chicken with recession, but ultimately the issues constraining supply need to be resolved, whether that's related to COVID shutdowns, supply chains, or supply disruptions and sanctions related to the war in Ukraine,” he said.

Inflation has soared since the start of 2022, but Americans appear to be coping so far. Higher costs don’t appear to have reduced highway traffic and crowded airports.

So how are consumers getting by? According to the Wall Street Journal, people are dipping into the significant savings they accumulated during the COVID-19 pandemic. 

Those nest eggs are substantial. Moody’s Analytics estimates that Americans saved $2.7 trillion of the government stimulus checks they received, which went into bank accounts along with other income that didn’t get spent on travel, dining out, and entertainment.

After months of inflation, consumers are saving less. Americans’ saving rate – what’s left after normal spending – fell to 5.4%. 

Most still have some cash

In April 2020, when the economy shut down to try to block the spread of the coronavirus, the U.S. Bureau of Economic Analysis put the saving rate at 34%. Moody’s Analytics estimates that consumers have spent about $114 billion of the money they socked away.

“Most households have a cash cushion to navigate through the very high inflation,” Mark Zandi, Moody’s Analytics chief economist, told the Journal. “This is allowing consumers to stay in the game.”

But how long can that last? A survey by J.D. Power shows that an increasing number of consumers would like to get more financial advice and guidance from their bank.

Researchers found that 59% of retail bank customers say they expect their financial institutions to help them improve their financial health. J.D. Power’s 2022 U.S. Retail Banking Advice Satisfaction Study suggests very few banks are delivering on that expectation. 

The survey found that overall customer satisfaction with the advice and guidance provided by national and regional banks is 30 points lower on a 1,000-point scale than it was 12 months ago.

“The data make it crystal clear: Retail bank customers want guidance, but many aren't receiving it,” said Jennifer White, senior director for banking and payments intelligence at J.D. Power.  “The tools banks have at their disposal aren't always being used or, when they are, they are not used effectively.”

Capital One scores highest in satisfaction

Capital One ranked the highest in customer satisfaction with retail banking advice in the survey, with a score of 629 on a 1,000-point scale. Citibank ranked second, and Bank of America ranked third.

Toya, of San Diego, is a particularly enthusiastic Capital One customer.

“This bank is just bomb,” Toya wrote in a ConsumerAffairs review. “I love them SOOOOOOOOOOOO much!!!!! They've been with me for years. This bank ALWAYS has my back. ALWAYS. It's a ride or die bank.” 

But when it comes to banks offering customers helpful advice, J.D. Power found a lot less enthusiasm. Fewer bank customers can recall receiving financial advice from their bank in the last 12 months.

“When two or more instances of advice are recalled by customers, overall satisfaction increases 52 points,” J.D. Power said in its study. “But a cookie-cutter approach will not suffice.”

The company says consumers expect advice and guidance to be personalized to their situation and be delivered at the right time.

To measure the impact of inflation, you really don’t have to look much further than the traditional Fourth of July holiday cookout this weekend. This year’s feast will cost quite a bit more, according to the American Farm Bureau Federation.

The group estimates that consumers will pay $69.68 for their favorite Independence Day cookout foods, with the menu including cheeseburgers, pork chops, chicken breasts, homemade potato salad, strawberries, and ice cream.

AFBF’s marketbasket survey shows the average cost of a summer cookout for 10 people is $69.68, which breaks down to less than $7 per person. The total cost was $10 less last year, meaning the price is up 17% since 2021.

AFBF says the higher prices are the result of supply chain issues and the war in Ukraine. The money isn’t going into producers’ bank accounts.

“Despite higher food prices, the supply chain disruptions and inflation have made farm supplies more expensive,” said AFBF Chief Economist Roger Cryan. “Bottom line, in many cases the higher prices farmers are being paid aren’t covering the increase in their farm expenses. The cost of fuel is up and fertilizer prices have tripled.”

Burgers cost 36% more

The survey shows the retail price for two pounds of ground beef is $11.12, up 36% from last year. Several other foods in the survey, including chicken breasts, which have increased 33%, and pork chops, which cost 31% more, have risen by double digits over last year.

Even homemade potato salad, fresh-squeezed lemonade, pork and beans, hamburger buns, and cookies have increased in price from 2021.

Holiday chefs are getting a break when they purchase fresh strawberries, however. The price is down by 86 cents compared with last year.

Sliced cheese is down 48 cents, while potato chips have fallen 22 cents from last year. AFBF attributes those price declines to better weather conditions in some fruit-growing regions and greater retailer pricing flexibility for processed products.

Consumers who spend all of their money between paydays are in good company. A survey by PYMNTS shows that 61% of U.S. consumers were living paycheck to paycheck in April, 9% more than in April 2021.

Even more affluent Americans have little to nothing left over when their next paycheck arrives. The data shows that slightly more than 1 in 3 people earning $250,000 or more annually currently live paycheck to paycheck. 

The researchers found that these high-earning consumers handle their financial lifestyles in different ways. They are often associated with stronger credit scores and more intense credit usage and are likely to control their cash flows. 

Consumers earning more than $250,000 a year are 40% more likely to use financial products than consumers in the lowest bracket, and as many as 63% of them have a credit score exceeding 750. 

In other words, living paycheck to paycheck appears to be a lifestyle choice. If they have the money, they spend it.

On the other end of the scale, consumers with lower incomes who live paycheck to paycheck generally do so because of financial distress. They have fewer attractive credit options than wealthier consumers.

Vulnerable to the ravages of inflation

Those with lower incomes are also more vulnerable to the ravages of inflation. When the cost of food and energy rose sharply this year, lower-income consumers who live paycheck to paycheck had little option other than to cut spending or tap into expensive credit, such as credit cards.

A report from LendingClub shows things didn’t get much better last month, with more Americans turning to high-interest credit cards to make ends meet. Americans paid off billions in credit card debt during the first months of the pandemic in 2020 but since then have added to balances. The trend has picked up speed with inflation, which is at the highest rate in 40 years.

Unfortunately, the interest rate on credit cards has moved higher with the Federal Reserve’s policy of increasing interest rates. According to LendingTree, the average credit card interest rate is now over 20%.

When households live paycheck to paycheck, it means they aren’t saving any money. A recent Harris Poll shows inflation is eating up money that might normally go into a savings account.

The poll found that 39% of women said they are saving less money than they did last year. Another 40% of hourly workers with a household income of less than $100,000 said they are saving less than last year or not at all.

Inflation is hitting just about everyone, but a new survey shows that it’s hitting America’s working men and women – those who work for hourly wages instead of salaries – the hardest.

A Harris Poll of hourly workers, commissioned by DailyPay and Funding Our Future, reveals how quickly rising prices have resulted in a reversal of fortunes in many households. Thirty-nine percent of women in the survey said they are saving less money than they did last year. Another 40% of hourly workers with a household income of less than $100,000 said they are saving less than last year or not at all.

The prices of some products are causing more distress than others. Eighty-one percent of hourly workers in the poll reported that higher gas prices have made it difficult to pay other expenses.

When asked to list the expenses that are causing financial hardships, 49% of respondents mentioned groceries, 48% listed gasoline, 40% said utility bills are causing economic distress, and 34% said it is harder to pay their rent or mortgage.

While these expenses are going up, many hourly workers said their incomes are not. Thirty-five percent said they haven’t received a raise in over a year. The less money these workers earn, the more likely they are to say their pay has remained flat.

The importance of emergency savings

All of these financial worries are taking a toll on personal well-being, with 77% of hourly workers saying their health has suffered because of financial worries.

"First the pandemic's immediate economic fallout, now record inflation and high gas prices have reminded us how important financial security and flexibility are for American families," said Shai Akabas, director of economic policy at the Bipartisan Policy Center. "It's crucial that we increase access to tools like emergency savings accounts and on-demand pay that help workers save for and weather turbulent times."

Previous research has made it abundantly clear that millions of people don’t have nest eggs available to cushion inflation’s blow. Last month, LendingClub Corporation published research showing that nearly two-thirds of the U.S. population lives paycheck to paycheck.

By its very definition, living paycheck to paycheck means you aren’t putting any money in savings or building an investment portfolio. As long as they pay their bills on time, these consumers remain creditworthy. However, it could take just one unexpected car or home repair bill -- or an increase of $5 a gallon for gasoline -- to change that.

The already expensive 30-year fixed-rate mortgage got even more expensive this week. After Friday’s sharp rise in the Consumer Price Index, the rate for the most popular mortgage type rose from 5.62% to 5.86%.

According to Mortgage Daily News, it was one of the biggest one-day jumps in rates on record — and 5.86% is just the average. Homebuyers with lower credit scores can expect to pay well over 6%.

As recently as December, homebuyers were paying as little as 3% on a mortgage. The recent increase makes today’s house payments expensive enough to price many potential homebuyers out of the market.

Kate Wood, NerdWallet’s housing market expert, said that’s exactly what the Federal Reserve is trying to do – cool off the red-hot housing market to help ease inflation.

“The 30-year fixed-rate mortgage leaped the 5% threshold three weeks before May's 50 basis point rise,” Wood told ConsumerAffairs. “Since then, rates for the 30-year fixed have fluctuated but stayed above 5%. Even though we're anticipating additional increases to the federal funds rate throughout the remainder of the year, it's possible that mortgage lenders have already built these into their offered rates.”

The difference in a 3% and a 6% rate is significant: The payment on a $250,000 mortgage at 3% is $1,050. At 6%, it's $1,499 – an extra $5,388 per year.

Exploring other options

People determined to purchase a home in the near future are exploring other options. Adjustable-rate mortgages (ARMs) have become more popular because their average rate is currently below 4%. But, as the name implies, these rates can adjust over time — and they're currently moving higher.

Others are exploring 40-year loans. Financing a loan over an extra 10 years brings down the monthly payment, but it’s not without risk; with this option, you pay more in interest over the life of the loan.

“I have seen mortgage simulations where a borrower using a 40-year mortgage would pay in interest alone almost what they paid for the home – in essence, almost doubling the cost of the home,” Kristina Morales, a Realtor in Cleveland, Ohio, told us back in April.

Wood advises would-be buyers in this environment to shop carefully for a mortgage to secure the best terms. ConsumerAffairs has vetted the best mortgage lenders and gathered thousands of verified reviews to help you choose the right option for you.

Americans say they’re putting aside their retirement dreams for the moment – at least until the price of consumer goods and inflation settle down.

The BMO Real Financial Progress Index, a quarterly survey conducted by BMO and Ipsos that measures Americans' opinions about financial confidence, found that nearly 60% of those surveyed think that inflation has adversely impacted their personal finances. Another 25% feel that rising prices have had a “major” effect on their finances.

The survey also showed that 36% of Americans have reduced their rainy day savings, and 21% have cut back on putting money away for retirement. Younger Americans – aged 18 to 34 – are taking the biggest hit, with over 60% of respondents in that demographic saying they have had to reduce contributions to their savings in order to make ends meet.

What people are doing to offset the growing costs of living

Consumers are taking a wide range of steps to keep their financial lives from crashing down around them. Some of them include: 

Changing how they shop for groceries. Forty-two percent of survey respondents are opting for cheaper items and avoiding brand names. Instead, they're buying more store brands and limiting purchases to necessary items.

Dining out less. Forty-six percent of the respondents said they either dine out less frequently or are consciously spending less when they do go out. 

Driving less. Thirty-one percent of respondents are driving only when it’s necessary to offset the soaring cost of gas.

Spending less on vacations. Twenty-three percent of consumers said they’ll be cutting back on some of the frills when they go on vacation or canceling their vacation plans altogether.

Cutting back on subscriptions. Twenty-two percent of respondents said they are ending subscriptions to their gym, streaming platforms, and other services to save money.

What financial plan experts suggest as best practices

ConsumerAffairs reached out to retirement planning experts to see what they suggest Americans do to gain some financial balance between their spending habits and rising inflation. Paul Tyler, the Chief Marketing Officer at Nassau Financial Group, said the first thing near-retirees should do is continue to work if they can.

“By continuing to work, near-retirees can continue to bring in a paycheck to cover surprise expenses and let their 401(k) balances grow a little longer,” he told ConsumerAffairs.

He added that cutting back on unnecessary expenses is also a good strategy right now.

“Analyze your credit card bills and see where you can conserve cash. Call your cable provider and request a discount. Tell your cell phone company your thinking of switching carriers and they may offer a discount. Plan errands to maximize your gas dollars.”

Another insight comes from Mark Williams, CEO at Brokers International. He says consumers should try to reduce expenses by cutting out certain "luxury" purchases, but he also notes that credit card spending is also something to keep an eye on.

"If you are noticing money is getting tighter, try not to start using your credit card more often and go into debt," Williams told ConsumerAffairs.

His suggestions for small changes you can make to your retirement strategy that might help?

• Reduce the amount you contribute to your retirement accounts by reducing the withdrawal percentage you are contributing to your 401K, IRA, 403B, etc…
• Reduce the amount of auto-withdrawal (if you have one) that is going to a savings account.
• Reduce the amount you may be saving for secondary education.
• Consider using the equity in your home for certain expenses by using a HELOC or other type of equity loan.
• Consider increasing your deductible(s) on certain insurance policies (homeowners, car, boat, etc…) to reduce the monthly premiums. However, consumers should note that increasing deductibles means paying more out of pocket if there is a claim. If you take this approach, Williams says you should increase your safety net emergency savings account to offset the increase.
• Consider a review of your life insurance policies and determine if you are overinsured. If you are, you could lower the face amount of the policies to reduce cost. This should be done after speaking to a financial advisor. 

"Always seek professional advice when making changes to any retirement strategy and that becomes increasingly more important the closer you are to retirement," Williams emphasized.

Consumers continued to face higher prices across the board in April. The Labor Department reports that its Consumer Price Index (CPI) rose 0.3% from March to April and is up 8.3% over the last 12 months.

While still high, the April inflation rate was down from March's 1.3% increase and 8.5% annual inflation rate.

Consumers paid more for housing last month, with the cost rising 0.5% from March and gaining 5% over the last 12 months. Food costs were also higher. Gasoline prices actually fell 6.1% from March, but as every motorist knows, they are back up in May.

For consumers on fixed incomes or those who live paycheck-to-paycheck, the surge in the cost of living can create significant challenges. Many personal finance advisers worry that rising prices will push some people to take out payday loans to try to make ends meet.

"Inflation is making it much more expensive to buy everyday items like gas and groceries, and for consumers who already struggle to make ends meet, payday loans may seem like the way to stay afloat,” Annie Millerbernd, NerdWallet’s personal loan expert, told ConsumerAffairs. “But we know that payday lenders build their business on folks who have to borrow again and again because they can’t pay off that first loan.”

To counter the repeat borrowing cycle, 16 of the 26 states that allow payday loans have adopted reforms that require lenders to offer borrowers free extended payment plans. But a recent report by the Consumer Financial Protection Bureau (CFPB) found that many borrowers continue to pay steep roll-over fees even with this protection.

Other options

Before going to a payday lender, Millerbernd says consumers should explore all other options.

“If a friend or family member can loan you some extra cash, that’s a much safer choice,” she said. “You can also try local nonprofits or charities, which may help with essentials like food.”

If you must borrow to make ends meet, Millerbernd suggests considering a loan that can be repaid in installments rather than all at once. Personal loans are usually a better option since they carry lower interest rates and the loans can be paid back in fixed installments over time.

“Buy now, pay later loans may be one way to afford some of those regular expenses without a credit check, just be sure you have a plan to pay it off on time," Millerbernd said.

The cost of living continued to move higher in March, fueled by rising prices of gasoline, food, and housing.

The Labor Department reports that the Consumer Price Index (CPI) rose 1.2% from February to March and is up 8.5% over the last 12 months, the highest annual inflation reading since 1981.

The price of gasoline rose by 18.3% in March and was a major driver of inflation; it has increased by 48% over the last 12 months. The food index rose 1%, and the cost of food prepared and consumed at home gained 1.5%.

“The shelter index was by far the biggest factor in the increase, with a broad set of other indexes also contributing, including those for airline fares, household furnishings and operations, medical care, and motor vehicle insurance,” the Labor Department said in its release. 

Wake-up call

The only good news in the March numbers was the price of used cars. After months of steady increases due to the new car shortage, the index for used cars and trucks fell 3.8% over the month. But economist Joel Naroff, of Naroff Economics, says the March inflation report should be a wake-up call.

“The scary part is we’re pushing toward double-digit inflation and no one wants to see that,” Naroff told ConsumerAffairs. “No one wants to see 8.5% inflation.”

Naroff says housing inflation is being driven by a shortage of homes for sale, which has pushed prices consistently higher. 

“I mean, you’re talking about a six month supply of houses in most places, less than that in some areas,” he said. “Houses are on the market three to five days and if you’re on the market more than five days people wonder what’s wrong with your house.”

More pressure on the Fed

The latest inflation numbers, while not unexpected, will likely put even more pressure on the Federal Reserve to take action to curb rising prices. The Fed is widely expected to hike the federal funds rate by 50 basis points at next month’s meeting. 

Naroff said he would not rule out a 75 basis point hike, which would further increase the borrowing costs on auto loans and credit card payments. It all adds up, he says, to growing financial pressure on consumers.

“If you go through the details of food costs, every category is showing large increases over the year,” Naroff said. “With rent also jumping, the staples of life, food, energy, and shelter, are likely forcing some people to do without.”    

The Labor Department reports that the Producer Price Index (PPI)  – the costs incurred by companies that make things – went up 10% in February. Making matters worse, the government revised January’s PPI up to 10% as well.

Economist Joel Naroff, of Naroff Economics, says that’s not good news for consumers. Eventually, those cost increases are going to get passed along to consumers, perhaps in areas where it will hurt the most.

“The surging food and energy prices are likely to move through the economy, but that takes time, so the expectation is that producer costs will continue to rise strongly over the next few months, though maybe not as massively as they have been,” Naroff told ConsumerAffairs.

There are two choices for businesses getting hit with these higher costs: Pass them along to consumers or absorb most of them and reduce their profit margins. Publicly traded companies may be less likely to do the latter.

Food and energy costs accounted for the biggest cost increase for producers last month. If those two categories are removed, the increase in inflation and the wholesale level drops to 6.6% – which is still the highest level in decades.

A pass to raise prices

The question for consumers is will these price increases persist, or will they be "transitory," as the Federal Reserve said in 2020? If they continue for at least a while, Naroff thinks it could flash a green light for businesses to raise prices permanently.

“For the last 10 to15 years, firms had limited pricing power,” he said. “I used to say that, outside of food and energy, the path from rising producer costs to increased consumer prices was random and often wound up at a dead end. Thus, price increases were frequently temporary or limited.”

Unfortunately, things seem to have changed now. Narroff says the result could be rising prices at the retail level.

“Now firms have pricing power and one way they have of retaining that power is to limit the reduction in prices as input costs decline - if and when they do,” Naroff said. “That is likely to be the case for as long as firms can keep that going.”

The Federal Reserve wraps up its March meeting today and is widely expected to increase a key interest rate as a way to keep inflation in check. While it might help, it would also increase the interest rate consumers pay on auto loans and credit card debt.

Inflation surged last month, rising 0.8% from January as consumers paid significantly more for gasoline, food, and rent. On a year-over-year basis, the Labor Department’s Consumer Price Index (CPI) rose 7.9%, the highest change to the inflation rate since January 1982.

The cost of gasoline rose 6.6% in February and accounted for almost a third of the monthly increase. For the last 12 months, gas prices are up 38%.

The food index rose 1%, and the food at home index rose 1.4%. Both were the largest monthly increases since April 2020. The cost of shelter rose 0.5% from January to February, rising 4.7% over the last 12 months.

Car prices improve while other costs go up

Economist Joel Naroff of Naroff Economics notes that rising prices were also present in most other areas of the economy, even though there was a glimmer of good news.

“The massive surge in used vehicles may finally be ending, as prices inched downward,” he told ConsumerAffairs. “However, there are no signs that vehicle costs will be falling much in the next few months.”

Meanwhile, the Labor Department reports real average hourly earnings for all employees decreased 0.8% from January to February, which is not a good situation when consumer prices are going up.

“Household costs are surging significantly faster than wages, so inflation-adjusted earnings dropped sharply in February,” Naroff said.  “Over the year, consumer spending power is down a huge 2.6%.”

What consumers are doing to adjust

Consumers have been taking steps to cut their spending in the face of rising prices, and those steps take various forms. Charles, of Fargo, N.D., told us he signed a service contract with Car Shield.

“Since I and my wife are retired, we can't afford to trade vehicles due to the current inflation rates for both new and used vehicles,” Charles wrote in a ConsumerAffairs review. 

Thomas, of Clarksville, Ind., tells us he has taken steps to protect his retirement savings by working with Noble Gold.

“Noble Gold's representative…helped me to handle the transfer of a portion of my IRA to gold,” Thomas wrote in his review. “A wise precaution in the inflationary environment ahead.”

Even when food and energy are removed from the equation, the February CPI was 0.5% higher. The Labor Department reports that the shelter index was by far the biggest factor in the increase, as rents continued to rise during the month. 

With surging oil prices and a war raging in Ukraine, the price of gold shot up this week, reaching its highest level in 19 months.

Tuesday’s price for the precious metal hit $2,069, just shy of the record high set in August 2020. Gold has lost a lot of its luster since that time, with more money moving into cryptocurrencies and away from the traditional inflation hedge.

The current rebound in gold prices may cause some people with gold jewelry or gold coins to consider selling. Fergus Hodgson, director at Econ Americas and deputy editor of the Gold Newsletter, says predicting where gold prices go from here is extremely difficult.

“There are many unknowns, particularly geopolitical developments,” Hodgson told ConsumerAffairs. “Given what we saw in 2020, though, there is substantial room for upward movement. This is not a bad time to sell gold, but prices could still rise plenty.”

At the moment, gold faces competing catalysts. On one hand, times of uncertainty caused by the Russian invasion of Ukraine tend to make gold an attractive safe haven.

However, the current state of the economy is necessitating a rise in interest rates. Not only are policymakers raising rates, but bond yields are also moving higher. Market analysts say rising rates sometimes make gold less attractive.

What to do before selling

With prices at current levels, gold dealers – including retail jewelry stores – may step up their marketing efforts. When prices rise, signs declaring “we buy gold” often appear in store windows. Hodgson says consumers deciding to cash in their gold need to do their homework and not take the first offer.

“Gold that is not in recognizable coin form is more difficult to value and subject to more variation in price offers,” he said. “Fortunately, one can find different local dealers and ask for offers, thus enabling comparisons. If you want to work with a more recognized dealer, subject to private arbitration, you can look for a member of the Professional Numismatists Guild.”

Whether consumers decide to sell their gold now may depend on where they think prices go from here. Market analysts appear divided on that point. 

Some believe prices can move well past the 2020 record, while others think the price hinges on what happens in Ukraine. Margaret Yang, a strategist at DailyFX, told CNBC that she believes gold will fall back to pre-crisis levels once the geopolitical dust settles.

The average U.S. gasoline price hit a record high Tuesday as oil prices continue their surge. A key industry analyst says the move will prove costly for the average household.

According to AAA, the national average price of regular gas increased 11 cents a gallon from Monday to Tuesday, rising to a record $4.17 a gallon. That eclipses the previous record of $4.11 a gallon, set in July 2008.

Adjusted for inflation, however, the 2008 average price is equivalent to $5.37 a gallon in today’s dollars.

Even so, the sudden escalation in prices, triggered by worldwide sanctions on Russia, the world’s second-largest oil producer, is delivering a hammer blow to household budgets. In a research note published on LinkedIn, Edward Yardeni of Yardeni Research estimated that the rising price of oil will cost the average U.S. household an additional $2,000 to fill up their vehicles in 2022.

Impact beyond the gas pump

But the impact doesn’t end at the gas pump. Yardeni notes that rising fuel costs will spread throughout the economy, causing many businesses to raise prices.

“We estimate that the average household is currently spending at least $1,000 (seasonally adjusted annual rate) more on food as a result of rapidly rising grocery prices,” Yardeni wrote. “That’s $3,000 less money that households have to spend on other consumer goods and services, which also are experiencing rapid price increases.”

Economist Joel Naroff, of Naroff Economics, agrees that the surge in oil prices will have a ripple effect throughout the economy and will probably last for a while.

“Transportation costs rise so businesses pass those costs along to all their products, most of which have nothing to do with energy,” Naroff told ConsumerAffairs. “Sanctions are also making it harder to transport goods as airspace is affected and overland trucking and rail routes are being modified.  The global supply chain is being challenged further as a result.”  

Some regions affected more than others

A report released this month by Sen. Mike Lee (R-Utah) traces the rise in inflation and concludes that it will affect some areas of the U.S. more than others.

“Last year, the average inflation cost per household rose from roughly $100 in April 2021, when the annual inflation rate first started accelerating, to over $380 in January 2022 when it hit 7.5%,” the report by the Joint Economic Committee stated.

Americans in the Mountain region of Utah, Colorado, Arizona, New Mexico, Montana, Idaho, and Wyoming are expected to feel the effect of inflation the most, paying an extra $500 in household costs.

“Alternatively, those in the East South Central region, made up of Kentucky, Tennessee, Mississippi, and Alabama, are experiencing the lowest monthly inflation costs due to relatively lower inflation rates and average spending levels,” the authors wrote. 

The cost of living is rising with increasing speed. This week, the Labor Department reported that consumer prices in December were 7% higher than the year before, led by energy, food, and automobiles.

But an analysis of ConsumerAffairs reviews shows that consumers are feeling the pinch just about everywhere. Even when they are satisfied with a company’s service, they can’t resist noting that costs aren’t what they used to be.

“Customer service is great,” Scott, from California, wrote in a review of Orkin. “Scheduling is an A also and it's done on the computer. But Orkin should be aware of fixed income customers and not go raising prices above the inflation rate. Other than that, they're excellent and they do the job.”

Kathryn, of Riverside, Calif., tells us she has noticed that even the cost of insurance for her pet has gone up in recent months.

“We chose Prudent Pet because it was affordable and covers possible hereditary conditions that a lot of other companies don’t cover,” Kathryn wrote in a ConsumerAffairs review. “The only complaint I have is that our premium jumped up and is about $20 MORE a month than it was last year, and our dog is not even two years old yet nor has he had any major health issues to cause such a big premium jump. It’s still more affordable than other companies I’ve looked into.”

A big increase since 2008

Michalina, of Clinton, Conn., has noticed a big change since she remodeled her bathroom in 2008. Granted, that was a long time ago, but inflation was practically non-existent during much of that time. 

“The crew was professional, considerate, and truly experts in this craft,” Michalina wrote in a review of Bath Fitter. “The price, however, was surprisingly steep given the amount of work and compared to 2008.”

Despite the price, Michalina gave Bath Fitter a 5-star review. Joe, of Rochester, N.Y., was also favorably impressed with Endurance Auto Warranty – except for the cost.

“The plans were a little pricey, especially for people that are on fixed incomes,” Joe told ConsumerAffairs. “I realized that it’s inflation time, but even so, for some people that need their vehicles, the prices are a little high.”

Difficult for consumers on fixed-incomes

So far, inflation doesn’t seem to have stopped consumers from spending. However, economists are concerned that conditions could change if prices continue to climb. And the latest evidence suggests that they will.

On the heels of the increase in consumer prices, the Labor Department reported this week that producer prices – a measure of costs at the wholesale level – were also higher in December, rising 0.2%.

The cost of services – things like pet insurance, pest control, and auto warranties – rose even faster, gaining 0.5%.

Consumers continued to encounter inflation last month, but the pace of rising prices slowed a bit from October’s reading.

The Labor Department reports that the Consumer Price Index (CPI) rose 0.8% from October, but the year-over-year increase was the biggest since 1982 – 6.8%. When the volatile food and energy price sectors are removed, inflation increased 0.5% from October and 4.9% over the last 12 months, the biggest gain since June 1991.

That said, food and energy were big drivers of inflation last month. The gasoline index was up 6.1% in November, the same as in October. Heating oil rose by 3.1% after a 12% gain the month before.

Food costs were up 0.7%, with food prepared at home once again costing more than eating out. All of the six major grocery store food group indices increased in November when compared to November 2020. 

The price index for meats, poultry, fish, and eggs increased by 12.8%, with the index for beef rising by 20.9%. The index for dairy and related products posted the smallest increase, rising 1.6% over the last 12 months. 

Car prices still going up

Used vehicle prices continued to rise twice as fast as the cost of a new car or truck, which was up 1.1% from October. Used cars and trucks increased in price by 2.5%. On a year-over-year basis, used vehicle prices are up 31.4%, while new vehicle prices have risen by 11.1%.

It also cost more to put a roof over your head last month. The price of shelter matched October’s 0.5% gain and was 3.8% higher than 12 months ago. With supply chain issues persisting, the price index for household furnishings and operations increased in November, rising 0.8%, matching the October increase. The apparel index rose 1.3% after being unchanged in October. 

Travel increased last month, and so did airfares. There were fewer bargains as fares reversed recent declines and increased by 4.7%.

The cost of medical care rose last month, but at a slower rate than in October. Health care costs were up 0.2%, with doctors’ bills and prescription drugs driving most of the increase.

There were a couple of areas where prices actually went down last month. Car insurance rates were down 0.8% from October, and the cost of recreation was slightly lower after going up in each of the last nine months.

While consumers’ costs went up last month, wages did not. Real average hourly earnings for all employees decreased by 0.4% from October to November after inflation was taken into account.

Consumers are encountering higher prices at the gas pump, the grocery store, and the used car lot, and a new Gallup survey suggests that it’s taking a severe toll on many families’ finances.

In the poll, 45% of U.S. households reported that recent price increases are causing their family some level of financial hardship. Ten percent of respondents describe it as severe hardship that’s affecting their standard of living, while another 35% say the hardship is moderate.

Not surprisingly, the less income a household has, the more it feels inflation’s pain. Twenty-eight percent of families earning less than $40,000 say inflation is a severe problem. Nearly three in 10 of these households describe the hardship as severe enough to affect their current standard of living.

Inflation may be more of a problem this month as families face holiday expenses and significantly increased heating costs. The price of natural gas has doubled in the last 12 months.

All of these rising costs are also making medical expenses harder to handle for the average consumer. A survey conducted for Aflac found that many consumers are making tough choices, including forgoing medical care, taking on extra work, and cutting back on holiday spending. 

COVID-19 and children increase costs

A case of COVID-19 in the household and the presence of children also increased financial pressures, according to the survey.

"The study paints a picture of resourcefulness and sacrifice with certain households reporting that they had to take extra shifts at work, dip into their 401(k) accounts and even delay medical treatment for themselves," said Jeramy Tipton, senior vice president, Distribution Expansion and Consumer Markets at Aflac. "We also found that households with health insurance are not immune from having to cope with significant out-of-pocket health care expenses."

Nearly two-thirds of those with a COVID-19 case in the household reported out-of-pocket health care expenses in the last 12 months. That compares to 45% of other U.S. households. About 23% of households with a case of the coronavirus had out-of-pocket expenses totaling over $1,500.

COVID-19 has been a complicating factor for family finances in 2021. Households in which a family member was infected were three times as likely to have taken money out of retirement accounts and three times as likely to have filed for bankruptcy when compared to families that did not experience COVID-19.

How much does it cost for a standard medical scan? It depends on the hospital, researchers say. 

A new study by a team of researchers from Johns Hopkins and Michigan State universities, writing in the journal Radiology, found some hospitals charge 10 times more for the same scan than other hospitals. The researchers studied median prices for scans of different areas of the body, including the brain, chest, and stomach. They said the difference in cost from one facility to another was often thousands of dollars.

The researchers found a CT head scan had the widest variation in price. Hospitals with the lowest prices charged a median of $199 or less. Among the most expensive hospitals, the same brain scan carried a median price of $1,882. 

“This is very far away from a competitive market,” Ge Bai, a professor of health policy and management at Johns Hopkins Bloomberg School of Public Health and an author of the imaging-price study, told the Wall Street Journal.

New price disclosure rule

Health economists say these pricing disparities should not exist. Since early January, a new federal rule requires hospitals to publish price information about the services they offer so patients can shop around for the best price. That could save money for health insurance providers while reducing the patient’s out-of-pocket costs.

“Extending early evidence on hospital compliance with the Hospital Price Transparency rule (2,5), we found that eight months after the rule went into effect, only approximately one-third of U.S. hospitals disclosed their commercial negotiated prices for one of the 13 U.S. Centers for Medicare and Medicaid Services–specified shoppable radiology services,” the authors wrote.

The new federal rule requires hospitals to publicly disclose prices for services and prohibits them from trying to hide pricing when it is disclosed. Regulators drafted a provision in the rule that bars hospitals from inserting code into web pages with price information that makes them unlikely to show up in Google searches.

More than just a financial issue

Another study suggests that a significantly large and unexpected medical bill can cause more than financial distress. Researchers say it can also be a mental health issue.

When Centivo recently surveyed employees covered by employer-sponsored health insurance, it asked respondents if they had incurred significant medical expenses in the past two years. More than a quarter -- 27% -- said they had and that it affected their mental health. Sixteen percent said the surprise bill created family hardships.

"U.S. employers are rightly concerned about the mental health of their workforce during this time of immense societal changes and disruptions caused by the pandemic," said Dr. Wayne Jenkins, chief medical officer at Centivo. 

Researchers note that costs for both insured employees and employers keep going up. According to the Kaiser Family Foundation, the average premium for family coverage went up 4% this year.

Inflation was red hot in October. The Labor Department reports that the Consumer Price Index (CPI) rose by 0.9% last month from September. On a year-over-year (YOY) basis, inflation is surging at 6.2%, the highest rate since 1990.

The monthly all items seasonally adjusted increase was broad-based, with consumers paying more for energy, shelter, food, used cars and trucks, and new vehicles. Energy costs were 4.8% higher, largely driven by the cost of gasoline.

Food costs were another major factor driving consumer prices higher last month. The overall cost of food rose by 0.9% from September to October and was 5.3% higher than 12 months ago. The cost of groceries increased slightly more than food consumed away from home.

The CPI for all items other than food and energy rose by 0.6%, showing that inflation is embedded in many other sectors of the economy. Here are some of the larger increases:

• New vehicles -- up 1.4% over September and up 9.8% YOY

• Used vehicles -- up 2.5% over September and up 26.4% YOY

• Shelter -- up 0.5% over September and up 3.5% YOY

• Transportation services -- up 0.4% over September and up 4.5% YOY

• Medical care -- up 0.5% over September and up 1.7% YOY

Analysts say supply chain and staffing issues are contributing to rising prices. Merchants have newfound pricing power because of continuing shortages.

Unemployment claims still falling

The Labor Department also reports that initial claims for unemployment benefits totaled 267,000 last week, the lowest number since the pandemic began. The number of claims was 4,000 fewer than last week, which had been a post-pandemic low.

The total number of people who are continuing to draw unemployment benefits was 2,565,853, a decrease of 107,095 from the previous week. There were 21,713,655 weekly claims filed for benefits in all programs in the comparable week in 2020.

During the week ending October 23, extended jobless benefits were available in Alaska, Connecticut, New Jersey, and New Mexico. 

Official inflation measurements don’t always capture how fast prices are rising for the average consumer or show what forces are driving prices higher. A recent report from the International Houseware Shippers Association (IHSA) paints a clear picture.

Not only are there delays in shipping products from foreign factories to U.S. distribution centers, but the cost of moving goods across the ocean has skyrocketed. These costs are beginning to show up in prices that consumers pay.

The IHSA says container spot rates in the September to October period of 2020 ranged from $3,900 to $$5,000 per 40-foot container. During the same period this year, the cost surged by 300%, to $17,000 to $20,000.

If a distributor or merchant wants to expedite the shipping of products, they have to pay even more. To speed up a certain shipment, shippers must pay an extra $1,800 to $3,500 per container. To guarantee space for a container, shippers must pay an additional $2,500 to $8,000 per container.

Things inside containers will cost more

Those extra charges make the things inside the container cost more. Extra costs may be absorbed by various players along the supply chain, but it’s clear that consumers are paying at least some of the extra cost.

In September, the Labor Department’s Consumer Price Index (CPI) rose 5.4% year-over-year, gaining 0.4% in September alone. The cost of new vehicles rose by 8.7%, and apparel, mostly produced overseas, added to previous gains by 3.4%.

The bottlenecks at shipping harbors that delay the movement of goods create artificial shortages, adding to inflationary pressures. The IHSA reports that the lead time for shipping to delivery last month was up 275% over 2019.

$100 million in unfilled orders

When the organization reported its third quarter earnings this week, toymaker Hasbro said there were $100 million in orders that could not be filled during the July through September period. The company said the orders would eventually be filled in the current quarter, but consumers are the ones having to wait, even if they don’t end up spending more.

Leana Salamah, vice president of the International Housewares Association (IHA), says the clogged supply chain is “contributing to inventory shortages, but it is also a major factor in the inflation conversation, as these kinds of hikes in cost to bring products to the U.S. cannot possibly be absorbed by the suppliers and retailers alone - prices will have to go up.”

In September, the IHA reported that port congestion was going from bad to worse. To alleviate some of the pressure, the association said carriers plan to increase capacity from Asia to the U.S. West Coast by 22%, creating the potential for even more bottlenecks.

Industry analysts say the bottlenecks have been caused by a huge increase in demand for all types of products as the COVID-19 pandemic begins to fade. The IHA expects the additional demand to extend into the first quarter of next year.

Each month, the government issues its Consumer Price Index (CPI), a measure of inflation that consumers face when they shop. But behind those numbers, some sectors of the economy are feeling especially sharp price increases.

For example, the price of bacon has nearly doubled over the last 10 years, with much of that increase coming since the start of the pandemic. A White House report blames part of the increase on a lack of competition in the meatpacking industry, which officials say is affecting other meat prices as well.

“Large price increases for beef, pork, and poultry are driving the recent price increases consumers are seeing at the grocery store, the report said. “Together, these three items account for a full half of the price increase for food at home since December 2020. Since that time, prices for beef have risen by 14.0%, pork by 12.1%, and poultry by 6.6%.”

Nagging supply chain issues

Economists say nagging supply chain issues caused by the COVID-19 pandemic also play a large role in rising prices. When it reported earnings this week, food and beverage conglomerate Pepsico said supply chain bottlenecks are affecting wide areas of its business.

In an interview with Reuters, Pepsico’s chief financial officer Hugh Johnston said the company is scrambling to deal with a shortage of aluminum cans and Gatorade bottles. He said there was greater demand for these products as restaurants and theaters reopened this year, but supply chain constraints made it hard to meet that demand. Pepsico’s costs rose as a result, and Johnston said he feels confident that those higher costs will be passed along to consumers.

"I do expect there will probably be some price increases in the first quarter of next year as well, as we fully absorb and lock down the impact of commodity inflation," Johnston said in the interview.

Same price, smaller product

Consumers sometimes encounter inflation when the price of a product remains the same but they get less product. It happens a lot with packaged food products like breakfast cereal; in some cases, 12 ounces may be reduced to 10 ounces. 

Kim Sovell, a marketing professor at the University of St. Thomas in St. Paul, Minn., says consumers are likely to encounter the practice even more in the months ahead, especially if higher costs remain a permanent fixture.

“It’s really a way to conceal higher prices,” Sovell told WCCO-TV in Minneapolis. “We’re very deterred by price increases. We’ll switch brands. “We check prices every time we shop but we rarely check weight.”

Consumers are already braced for higher heating bills this winter as a result of surging energy prices. Natural gas prices doubled in six months and rose 17% in September alone. People heating their homes with electricity will also feel the effects of more expensive natural gas this winter. Most electricity generation plants are powered by gas. Industry analysts say the blisteringly hot summer increased natural gas demand to keep homes and businesses air-conditioned.

Utilities currently pay a little over $5 per 1 million British thermal units. For consumers heating their homes with gas, that roughly translates into twice the cost of last winter’s heating bills. Industry analysts say there is no guarantee that prices won’t go even higher.

Inflation increased 0.5% in July, down from June’s 0.9% rise. The Labor Department reports that the Consumer Price Index for the last 12 months increased 5.4%, the same as in June. Consumers felt inflation the most when they bought a new car, put gas in it, went to a restaurant, or tried to buy or rent a home. 

Food prices were up 0.7% last month, led by an increase in restaurant prices. The energy

index rose 1.6% in July, with the gasoline index increasing by 2.4% and other energy component indices also rising. The CPI, without the volatile food and energy components, rose 0.3%, significantly less than the 0.9% increase in June. 

The cost of new cars rose 1.7% last month and is up 6.4% year-over-year. Used car prices rose by just 0.2% in July but are up a record 41.7% over the last 12 months. Both increases are related to shortages caused by the pandemic.

Americans increasingly took part in recreational activities in July, at least before the Delta variant began to spread. When they did, they paid more for their fun. The cost of recreation rose 0.6% last month after rising 0.2% in June. 

Health care costs are continuing to climb after pausing in May and June. The cost for physicians’ services rose 0.4%, and hospital services increased 0.5%.

Rising prices were expected

Economists have expected inflation to rise as the economy reopens. After more than a year of the pandemic, there is pent-up demand for both products and services. A number of supply chain bottlenecks have led to an imbalance between supply and demand.

The Biden administration this week moved to head off growing concern among moderate Democrats about the pace of rising prices. National Economic Council Director Brian Deese told lawmakers that administration spending policies will lead to growth and temper rising prices.

At the same time, President Biden this week asked OPEC to increase oil production to slow rising gas prices. In a memo obtained by CNBC, National Security Advisor Jake Sullivan said the world’s oil producers should do more to support a worldwide economic recovery.

Consumers may be well aware that the cost of living has suddenly started to rise as the economy has reopened. But certain parts of the economy are raising prices faster than others.

The Labor Department’s report showing the Consumer Price Index (CPI) surged 0.9% in June also shows a small number of sectors scored eye-popping price increases. The cost of energy was up nearly 25 percent in the last 12 months.

Within the energy sector, the price of gasoline was up more than 45% year-over-year. But in June 2020, gas prices had plunged well below $2 a gallon because the pandemic had sharply reduced driving. Compared to May, gas prices were only up 2.5% in June

Used cars were another big driver of inflation last month. The price of used vehicles was up more than 45% compared to June 2020, when car sales had screeched to a halt. Compared to May however, used car and truck prices were up more than 10%.

New car prices rose at a much slower pace. New car prices increased around 5% over the last 12 months and were only 2% higher than in May.

Food costs rising at a slower pace

Consumers encountered less inflation at the supermarket. The price of food prepared at home rose just 0.9% over the last 12 months and 0.8% over May. Eating at restaurants was a lot more expensive, with the cost rising more than 4% year-over-year and 0.7% over the month before.

While the Federal Reserve has said inflation is “transitory” and to be expected as the economy reopens, economist Joel Naroff says consumers have a right to be concerned.

“On a year-over-year basis, the rise was the second largest in nearly thirty years, beaten out by the gasoline price surge in 2008,” Naroff wrote in his CPI commentary. “Excluding food and energy, you must go back to November 1991 to see any annual price increase greater.”

Even if rising prices turn out to be a temporary condition, Naroff says they can inflict some short-term pain. He notes that household incomes are not rising nearly as fast as prices, with inflation-adjusted wages actually going down.

Gold prices rose Tuesday in response to government data showing a slightly higher-than-expected reading on U.S. inflation. 

The reading “came in slightly over expectations, an indication that the U.S. economy is heating up a bit more than expected,” Jason Teed, co-portfolio manager of the Gold Bullion Strategy Fund told MarketWatch. 

The consumer-price index rose 0.6 percent in March after a 0.4 percent rise in February, according to the data. Economists were expecting to see a 0.5 percent increase in the CPI. 

"The March 1-month increase was the largest rise since a 0.6-percent increase in August 2012," the Labor Department report said.

June gold futures rose $8.50 at $1,741.20 an ounce, up 0.50 percent on the day. Overall, Teed said the precious metal is “responding positively to the news, but short-term price movements in the metal are not an indication of long-term trends.” 

During an interview on CBS News’ “60 Minutes” on Sunday, Federal Reserve Chairman Jerome Powell said the economy is at an “inflection point” right now. Barring another wave of COVID-19 cases, Powell said the economy is heading toward recovery from the pandemic.

Market analysts have pointed out that the risk of higher inflation could prompt the central bank to hike interest rates sooner than expected. However, economists say last year’s COVID-19-related disruptions are likely to impact annual forecasts. 

Bitcoin fell about 10 percent on Monday after Elon Musk tweeted that prices “seem high.” 

On Saturday, Musk -- who recently came out as a supporter of digital currencies -- responded to a user who said that gold was better than both Bitcoin and cash. 

“Money is just data that allows us to avoid the inconvenience of barter,” he wrote on Twitter. “That data, like all data, is subject to latency & error. The system will evolve to that which minimizes both.”

“That said, BTC & ETH do seem high lol,” he added. 

Volatile cryptocurrencies

By Monday morning, Bitcoin had dropped 10 percent to a price of $51,993, according to data from Coin Metrics. Analysts have pointed out that it’s not unusual to see fluctuations in the price of bitcoin. 

“It’s worth pointing out that price swings of more than 10% aren’t a rarity in crypto,” CNBC said in a report. “Bitcoin once climbed to almost $20,000 in 2017 before shedding 80% of its value the following year.” 

But if Musk’s statement did cause the drop, it wouldn’t be the first time the Tesla CEO has moved the market through a social media comment. Earlier this month, Musk confirmed that he’s a proponent of Bitcoin, saying on social media chat site Clubhouse: “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.” 

The statement is believed to have contributed to raising the price of the cryptocurrency close to 20 percent. The digital coin is up more than 80 percent so far this year. Musk has said he believes it’s“on the verge of getting broad acceptance by conventional finance people.”

The coronavirus (COVID-19) pandemic has inflicted losses on the nation’s hospitals in more ways than one, and a new report says the combined effect may be a reduction in services and higher costs for patients.

A study from QuoteWizard, an online insurance marketplace, shows that health care spending at hospitals fell by 43 percent in April and declined 37 percent at doctors’ offices. 

While some hospitals were overwhelmed with COVID-19 patients, people with other medical issues -- some very serious -- stayed away. There was a nearly 78 percent decline in in-person medical visits from March to April when compared to the same period in 2019.

A lot of the financial losses occurred early in the pandemic when facilities treating COVID-19 patients were practically overrun, but other medical facilities specializing in other conditions furloughed doctors and nurses.

Multi-billion dollar losses

The study suggests that the financial blow to the system has been severe and may take some time to overcome. Health care system losses are expected to total $120.5 billion from July through December 2020. For 2020 as a whole, losses could exceed $323 billion.

For the year, primary care practices are expected to lose $67,774 per full-time-equivalent doctor. Nationally, that amounts to about $15.1 billion. The study authors conclude that the system can’t absorb these kinds of losses without it affecting patient services. One of the biggest concerns is the hospitals’ ability to keep operating in this environment.

The study shows that many hospitals with mounting debts are unable to continue operating and will likely be forced to close their doors. The authors note that hospital closures are already becoming more common, especially in rural areas where health care facilities are few and far between. Already in the first half of 2020, there have been 12 rural hospital closures.

Higher costs for consumers

The study also suggests that consumers will pay a higher cost for health care, both in out-of-pocket expenses and in insurance premiums. They’ll do this, the authors explain, because hospitals will increase the average expense they bill per patient visit.

An analysis of Kaiser Family Foundation data from 2009 to 2017 found that the expense per hospital visit increased 36 percent over that period -- and that was at a time of relative stability within the health care system.

“Given the record debts set to accumulate for hospitals in 2020, the rate of health care expenses is likely to soar past the 36 percent rate over the last decade,” the authors conclude.

Consumers will likely feel that in the form of higher health insurance premiums as these higher costs get passed on to benefit providers, who will in turn charge more to policyholders.

In a report commissioned by President Trump’s Commodity Futures Trading Commission (CFTC), a U.S. regulator called climate change a “slow motion” systemic threat to the nation’s financial markets. 

Without sweeping efforts to curb climate change, its physical impacts -- wildfires, storms, floods, droughts, etc -- and the costs stemming from such catastrophes will threaten the stability of the financial system, the report said. 

“A world wracked by frequent and devastating shocks from climate change cannot sustain the fundamental conditions supporting our financial system,” said the 196-page report entitled “Managing Climate Risk in the Financial System.” 

The report noted that the physical impacts of climate change have already become evident in the U.S. 

“Both physical and transition risks could give rise to systemic and sub-systemic financial shocks, potentially causing unprecedented disruption in the proper functioning of financial markets and institutions,” the report said. 

The impact of the COVID-19 pandemic has only made matters worse by shrinking household wealth, government budgets, and rattling the economy in a number of other ways. The pandemic’s effects will end up “increasing the probability of an overall shock with systemic implications,” the report said. 

Avoiding financial destabilization 

To avoid the destabilizing effects of climate change, the report authors proposed:

• Establishing a price on carbon -- one that is high enough to get businesses and markets to stop using carbon dioxide-producing fuels, such as oil and gas; 

• Requiring banks to address climate-related financial risks and listed companies to disclose emissions; and

• Stress testing community banks for their resilience to climate change.

The report also called for a reversal of a proposed rule from the Trump administration’s Labor Department that would bar retirement investment managers from taking environmental consequences into account when making financial recommendations. 

“If there’s any class of investors that should be thinking about the long run, it’s retirement funds and pension funds,” said Nathaniel Keohane, an author of the report and an economist at the Environmental Defense Fund, an advocacy group.

The report authors also say that financial authorities should integrate climate risk “into their balance sheet management and asset purchases, particularly relating to corporate and municipal debt.”

The cost of living rose in July by more than most economists expected, but there’s not a lot of concern that we’re about to experience a burst of inflation.

While it’s true the government is pumping a lot of money into the economy, unemployment remains high and the economy isn’t growing. In fact, it’s moving in the other direction.

The Labor Department reports its Consumer Price Index (CPI) rose 0.6 percent in July, fueled mostly by an increase in gasoline prices. However, prices at the pump have leveled off in the last couple of weeks and have actually drifted lower. The government reports that the energy index increased 2.5 percent in July as the Index tracking gasoline prices rose 5.6 percent. 

Lower food costs

Food prices for July moved lower, with the food index declining by 0.4 percent. It was driven lower by a 1.1 percent decline in food prepared at home.

The cost of car insurance moved sharply higher last month as the steep discounts offered by major carriers during the initial pandemic expired. Consumers also paid more last month for rent, communication, used cars and trucks, and health care services.

Over a 12-month period, inflation is rising at 1.0 percent, not nearly enough to set off alarm bells. The Federal Reserve would actually like prices to rise at a 2.0 percent rate. Economists are generally pleased with the July report. Paul Ashworth, chief U.S. economist at Capital Economics in Toronto, told Reuters that inflation in July appeared to be in a healthy spot.

“This should end any speculation that the pandemic-related slump in demand will quickly push the economy into a deflationary spiral,” he said. “But this is not a sign that the U.S. is instead about to experience a bout of much high inflation because of supply restrictions.”

Inflation over the last 12 months

When the July numbers are placed in the context of the last 12 months, the cost of food has risen 4.1 percent since July 2019. Even though it rose in July, the cost of energy has actually declined 11.2 percent over the last year.

There are areas of the economy where consumers have faced rising costs and may be likely to do so in the coming months. While the price of prescription drugs dipped slightly last month, the cost of physician services jumped 0.7 percent and hospital services cost 0.2 percent more.

There was a big jump in the cost of wireless communication services, which rose 3.6 percent. Used vehicle prices rose 2.3 percent, ending three straight months of declines.

The Labor Department reports its Consumer Price Index (CPI), the chief way it measures inflation, rose 0.2 percent in December, a slowdown from the 0.3 percent rise the month before.

Taking the previous 11 months into consideration, the official inflation rate for all of 2019 was 2.3 percent, in line with the Federal Reserve’s target. Even so, it was the largest 12-month increase in prices since 2018.

But whether or not you felt financially stressed last month all depends on what you purchased. The cost of gasoline, housing, and health care all went up last month, accounting for most of the increase in the overall CPI.

The food index, which measures costs for food consumed at home and in restaurants, also went up by 0.2 percent. When food and energy are removed from the equation, prices rose just 0.1 percent.

The monthly report shows that consumers also paid more last month for clothing, car insurance, new vehicles, and recreation. They paid less for used cars and trucks, household furnishings and operations, and airline fares.

Energy led the increase

Energy costs made the biggest move last month, primarily due to rising gasoline prices. The energy index was up 1.4 percent in December, its third straight increase. 

Energy was driven higher by a 2.8 percent jump in the gasoline component, as prices at the pump drifted higher at a time they were predicted to fall. By the end of the year, the average price of gasoline was about 36 cents a gallon higher than the year before.

Food costs were pushed higher by increases in prices for meats, poultry, fish, and eggs. It was the only grocery store group to go up in price, rising 1.3 percent. Within that group, beef and eggs posted the largest increases.

Analysts say the overall inflation number, which remains tame, is likely to persuade the Fed that it’s on the right course and there should be no adjustment in interest rates, at least in the near term.

The latest report from the government on consumer prices shows inflation remains tame, but a survey of consumers shows something different. Many consumers, especially women, don’t think they’re keeping up.

The Bureau of Labor Statistics reports that the Consumer Price Index (CPI) rose in October by 0.4 percent, creating an inflation rate of 1.8 percent over the last 12 months. That’s slightly below where the Federal Reserve would like to see prices.

The official inflation rate rose last month largely because of higher gasoline prices, which have begun to slowly come down -- except in California. The index covering all forms of energy jumped 2.7 percent last month. The cost of medical care, recreation, and restaurants also rose.

More than half don’t think they’re keeping up

The prices consumers paid for clothing, household furnishings, new cars and trucks, and airline tickets went down in October. But if you didn’t buy any of those things, it might not feel like inflation is so tame.

That’s the conclusion of a survey of consumers conducted by CPI Inflation Calculator, a private online tool that analyzes inflation trends using official government data. A survey of 1,500 consumers between the ages of 18 and 65 found 56.1 percent don’t believe they’re keeping up with the rising cost of living.

Women were even more likely to say inflation isn’t so tame, with more than 63 percent of female respondents giving that response. Women 18 to 24 years of age feel the pinch even more, with 75 percent saying they aren’t keeping up with the cost of living. Fewer than 60 percent of men in that same age group gave that response.

Only 30 percent of the consumers participating in the survey said they are able to keep up with inflation. But again, when broken down demographically, more men than women declared that inflation is not a problem. Forty-two percent of men between the ages of 45 and 64 were not concerned about rising prices.

It often depends on what you buy

Whether a consumer is affected by inflation often comes down to where the individual consumer spends their money. If they have health problems or a child in college, they are most likely to think inflation is a problem. The costs of both of those categories are rising much faster than the rate of inflation.

Geography may also have something to do with it. Consumers who live in large coastal cities likely encounter a generally higher cost of living than people living in small- to medium-sized cities.

Inflation picked up its pace in July but is still relatively low, according to the latest report from the Labor Department.

The Consumer Price Index (CPI) rose 0.3 percent in July after going up just 0.1 percent in June. Over the last 12 months, the inflation rate is 1.8 percent, just below the Federal Reserve’s desired inflation rate of 2 percent.

July prices rose mainly on the basis of more expensive housing and gasoline, though gas prices have dropped in August and are expected to keep falling. The index for food was unchanged for the second month in a row. It cost less to prepare meals at home last month, but the cost of visiting restaurants went up.

“The index for all items less food and energy rose 0.3 in July, the same increase as in June,” the Labor Department said in its release. "The July rise was broad-based, with increases in the indexes for shelter, medical care, airline fares, household furnishings and operations, apparel, and personal care all contributing to the increase. The index for new

vehicles was one of the few to decline in July.”

More expensive fruit and vegetables

Consumers paid more last month for fresh fruits and vegetables, with the prices of those items rising 0.3 percent. The cost of cereals and bakery products increased by the same amount, with the price of meats, poultry, fish, and eggs going up 0.1 percent.

But three of the major grocery store food group indexes declined last month. The cost of nonalcoholic beverages fell for the second straight month, declining 0.4 percent. The index for dairy and related products fell 0.3 percent after rising in each of the previous five months.

The report may have an uncertain impact on the Fed’s decision to cut interest rates or leave them at present levels. Prices rose, but not by that much. Another interest rate cut could push the inflation rate to 2 percent, the Fed’s desired target.

Even with sharply rising gasoline prices in much of the nation, inflation was fairly tame last month. The Labor Department reports that the Consumer Price Index rose 0.3 percent in April following a 0.4 percent increase in March.

Gasoline accounted for much of the increase, rising 5.7 percent. The overall energy index was up 2.9 percent.

Partially offsetting more expensive gasoline, food prices actually went down in April, recording their first decline in nearly two years.

The cost of housing, medical care, education,  and new vehicles all went up in April. But the cost of used cars and trucks, apparel, and household furnishings and operations were among those that declined during the month.   

‘Happy story for families’

“The inflation story continues to be a happy one for American families, coming in tame for another month,” Robert Frick, corporate economist for Navy Federal Credit Union, said in an email to ConsumerAffairs. “With wages rising above 3 percent and the Consumer Price Index hovering around 2 percent,  real wages are rising from an average of 1.2 percent for low-skilled workers to 1.6 percent for high-skill workers.”

Frick says workers aren't seeing wage increases as high as in previous late-stage expansions because of slack in the labor force, but he said wages could rise if the labor market tightens again.

The slow rise in consumer prices, along with more modest increases in wage growth, will likely influence the Federal Reserve to hold the line of further rate hikes this year.

For months it’s been an article of faith that inflation is low and the Federal Reserve will hold off on any further rate hikes.

But one simple comment from Federal Reserve Chairman Jerome Powell has economists -- and the financial markets -- second-guessing that assumption.

Following the Fed’s two-day meeting, Powell told reporters the Fed believes the economy is showing some signs of weakness but said it is because of “transitory” issues. In other words, the Fed doesn’t expect that weakness to last.

That’s actually pretty good news, but the financial markets didn’t see it that way since it is hoping the Fed will actually cut interest rates. Powell made it pretty clear that’s off the table if there is a chance inflation can start to rise. And if the economy gains more traction prices could go higher.

The Fed would like a little inflation in the economy and has set a target of 2 percent inflation as ideal. So far, however, inflation remains well short of that goal at 1.6 percent.

“If we did see inflation running persistently below, that is something the committee would be concerned about and something we would take into account when setting policy,” Powell said.

But Powell said the Fed doesn’t expect that to happen and therefore probably won’t be cutting rates anytime soon.

Tame inflation so far this year

In its most recent inflation gauge, the Labor Department reported the Consumer Price Index, a measure of inflation at the retail level, rose 0.2 percent in February after being flat the month before. In the last 12 months, the CPI is up just 1.5 percent.

But some consumers complain that the prices of some goods and services are moving up at a faster rate. Despite the low numbers for February, government economists said consumers faced higher costs for housing, food, and gasoline.

Food costs were up 0.4 percent, their largest monthly increase since May 2014, as both the food at home and food away from home indexes increased.

The index tracking the cost of gasoline rose 1.5 percent in February, following three consecutive monthly declines. That pushed the overall cost of energy up 0.4 percent despite declines in the electricity and natural gas indexes.

Inflation jumped in March due to higher gasoline prices and rising food costs.

The Labor Department reports that the Consumer Price Index (CPI) rose 0.4 percent in March, twice the rate of February’s increase. Despite the sizable increase, inflation over the last 12 months is still running just under the Federal Reserve’s target of 2 percent.

Consumers saw the biggest price hikes last month in gasoline and other energy costs. That category was up 3.5 percent, accounting for about 60 percent of the seasonally adjusted all items monthly increase.

The index tracking gasoline prices rose sharply, along with the electricity index. With the heating season mostly over, natural gas prices were slightly lower.

Higher food costs

Food costs were higher last month, rising 0.3 percent. That follows a 0.4 percent increase in February. Most of the higher costs were in the produce section, with fresh vegetables rising 2 percent and fresh fruit going up 1.2 percent.

Despite the monthly rise in the CPI, Robert Frick, corporate economist for Navy Federal Credit Union, says inflation is still fairly tame, given the slow rise in wages.

“The index for all items except food and energy was up just 0.1 percent,” Frick told ConsumerAffairs. “The difference between this core number and headline number was mainly due to the energy index rising 3.5 percent in March. The food index also showed an increase, and in the last year that portion of CPI was up 2.1 percent, the most since 2015.”

Nothing to alarm the Fed

The CPI strips out food and energy costs from its main inflation number because those two sectors tend to be highly volatile. Frick says rising food costs may be a sign of economic health because consumers feel confident enough to splurge at the supermarket and at restaurants.

“These steady-as-it-goes numbers should have little effect on the Federal Reserve's decision to raise, lower or stand pat on rates,” he said.

Two sectors that were down in February were back up in March. Medical care costs rose 0.3 percent last month, largely due to a 0.6 percent jump in the cost of prescription drugs.

New car costs were 0.4 percent higher last month after giving ground in February. Meanwhile, clothing prices dropped 1.9 percent in March after going up in February.

Borrowers and lenders alike breathed a collective sigh of relief on Wednesday as Federal Reserve Chairman Jerome Powell’s forecast gave two thumbs up. In a nutshell, Powell’s outlook was affirmative.

“My colleagues and I have one over-arching goal: to sustain the economic expansion with a strong job market and stable prices for the benefit of the American people. The U.S. economy is in a good place, and we will continue to use our monetary policy tools to keep it there,” he said.

As far as interest rates and inflation go, Powell envisioned that interest rates will be in a holding pattern for a while and confirmed that inflation continues to be in check.

“We don’t see data coming in that suggests that we should move in either direction,” Powell commented after officials lowered their projected 2019 interest-rate increases this year to zero from two. “They suggest that we should remain patient and let the situation clarify itself over time. It may be some time before the outlook for jobs and inflation calls clearly for a change in policy.”

The Fed reports that on a 12-month basis, inflation has declined across the board, pegging the shift on lower energy prices. Looking further down the balance sheet, inflation for non-food and non-energy items are holding steady near 2 percent.

“On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed,” wrote the agency in its review of the current financial climate.

The deeper dive

While low inflation sounds like a good thing from a consumer angle, Powell called out global price pressures as being weak -- in his words, “one of the major challenges of our time.”

“I don’t feel that we have kind of convincingly achieved our 2 percent mandate in a symmetrical way,” Powell reflected. “That gives us the ability to be patient, and not move until we see that our target goals are being achieved.”

The jury might be out for a while trying to decipher Powell’s request for patience. “It was very dovish,’’ Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, told Bloomberg. “It suggests that the Fed has jumped to the conclusion that the weakening we have seen since the start of the year will be more fundamental and more persistent, rather than being temporary crosscurrents.”

“Policy makers appear to have cooled on the notion of any meaningful, lasting impact from last year’s tax reforms and instead project a return to trend growth, a stabilization of the unemployment rate and little pickup in price pressures. Amid this backdrop, they do not see much need to further normalize interest rates,” wrote Bloomberg economists Carl Riccadonna, Yelena Shulyatyeva, and Tim Mahedy.

The Consumer Price Index (CPI), the government’s primary inflation gauge, rose 0.2 percent in February after being flat the month before. In the last 12 months, the CPI is up 1.5 percent, well below the Federal Reserve’s inflation target.

The means the Fed is even more likely to hit the pause button on additional interest rate hikes for the rest of 2019. Robert Frick, corporate economist at Navy Federal Credit Union, says the numbers were up but not as much as expected.

“Inflation doesn’t appear to be heating up enough to trigger the Fed to raise interest rates, and it also shows that increases in wages aren’t pushing up prices much,” Frick said in an email to ConsumerAffairs. “No Fed action, tame inflation, and a good wages and jobs situation mean we remain in the Goldilocks zone for American workers and consumers.”

Some rising costs

Despite the low numbers consumers faced higher costs last month for housing, food, and gasoline. Food costs were up 0.4 percent, their largest monthly increase since May 2014, as both the food at home and food away from home indexes increased.

The index tracking the cost of gasoline rose 1.5 percent in February, following three consecutive monthly declines. That pushed the overall cost of energy up 0.4 percent despite declines in the electricity and natural gas indexes.   

While it’s always good for consumers when prices remain stable, the best news in the report is the influence on the Fed’s interest rate policy. The Fed’s discount rate directly correlates to credit card interest rates.

If the Fed holds off on rate hikes for the rest of 2019, it means consumers’ interest rates on their credit card balances won’t be going up.

You might not notice any change in the high cost of college or health care, but the overall inflation rate didn’t budge in January.

The Bureau of Labor Statistics reports that the Consumer Price Index (CPI) was unchanged last month. For the year, the CPI is up only 1.6 percent, well below the Federal Reserve’s target of 2 percent.

Food and energy costs, which together were lower in January, kept the CPI in check. When those two categories are removed, prices were up 0.2 percent. Robert Frick, corporate economist at Navy Federal Credit Union, says it’s almost as though Goldilocks wrote the CPI report since it was “just right.”

“The overall index was unchanged for January, and all items were up just 1.6% over the last year,” Frick said in an email to ConsumerAffairs. “Just as important, wages again ticked up, rising 0.1 percent in January. No increase in inflation combined with a rise in wages means American workers' real wages -- nominal wages minus inflation -- increased for another month.”

Moving in the right direction

While wages were higher, Frick says consumers haven’t seen the kind of real wage gains that have been present in other late-stage expansions. Even so, he says paychecks are moving in the right direction -- and the report holds more good news for consumers.

“This also argues against the Fed raising rates soon, at least, keeping the expansion expanding to the benefit of workers,” Frick said. “They should expect a continued strong jobs market together with rising real wages for the foreseeable future."

If the Fed decides there is no need to raise interest rates again, it means the interest rate on credit cards will likely remain stable over the next few months. Consumers carrying large credit card balances have seen their credit card interest payments rise every time the Fed hiked the federal funds rate.

Gasoline prices fall

In a big break for consumers, energy costs went down for a third consecutive month. The price of gasoline was down 5.5 percent.

The price of food was slightly higher last month, rising 0.2 percent from December. The biggest increase in food costs came in the restaurant sector.

Consumers paid more for housing, clothing, medical care, recreation, and household furnishings and operations last month. Airfares were cheaper and so were car insurance policies.

Despite the stock market's recent hand-wringing over inflation, there was little evidence of it in the U.S. economy last month.

The government's Consumer Price Index (CPI) rose a modest 0.1 percent in September, a slowdown from August's 0.2 percent rise. For the last 12 months, the nation's inflation rate is 2.3 percent.

Fears of rising prices have driven stock prices sharply lower this week, mainly because interest rates paid on government bonds have moved significantly higher. Stock traders have worried that rising bond yields – sometimes a sign of inflation – would prompt the Federal Reserve to double-down on its policy of raising the federal funds rate.

Robert Frick, corporate economist at Navy Federal Credit Union, says low inflation and a strong economy should ease fears of an overly-aggressive Fed.

“Inflation fears right now are based on historical models, not data, and the data says price and wage growth are not in danger of overheating the economy,” Frick told ConsumerAffairs. “This CPI report supports the Fed's plan of gradual rate increases, and Fed Chair Powell's wait-and-see strategy before changing that plan.”

And even though bond yields have been rising, Frick notes they remain well below historical averages.

What little inflation there was in the economy last month had mostly to do with housing. The CPI report shows shelter accounted for half of the seasonally adjusted increase.

Despite the rise in gasoline prices the energy sector was lower in September. Food prices were largely unchanged.

Just as consumers are finally increasing their incomes, they face another rising cost. Just about every type of consumer loan is getting more expensive.

This week, the yield on the Treasury Department's 10-year bond rose above three percent and appears poised to keep climbing. Even if you don't have money invested in bonds, it could affect you if you're buying a home or refinancing.

That's because mortgage rates are tied to the 10-year note. When its yield goes up, so do mortgage rates. The Mortgage Bankers Association (MBA) reports the 30-year fixed rate mortgage rate averaged 4.88 percent last week, the highest since 2011.

That's still low by historical standards, but since the financial crisis a decade ago, mortgage rates have bounced between 3 percent and 4 percent. When the mortgage rate is 5 percent or more -- a normal rate during the housing boom -- consumers face a higher monthly payment for the same house they could have purchased with a 3 percent mortgage.

Fed keeps hiking

Unfortunately, that's not the only loan that's becoming more costly. The Federal Reserve continues on its path of gradually raising the federal funds rate -- the rate it charges member banks. Those increases get passed along to consumers who carry a credit card balance.

The average credit card rate is already at a record high and will go up each time the Fed hikes rates. The credit bureau TransUnion estimates that affects about 92 million consumers who carry credit card balances and will create a financial hardship for 9 million of them.

Higher car payments

Auto loans are also influenced by the federal funds rate, as are just about all loans consumers get from a bank. With the Fed's tightening policy, the monthly payment on new and used cars will get more expensive.

What's it mean for consumers? If you've begun shopping for a house, you might have to lower the price range in which you're looking. If you're selling a home, you might need to be flexible on the price. If you're thinking about buying a new car, it might pay to consider a late model used car.

And interest rates are likely to move higher before they go down again. The Fed meets next week and is expected to hike its key interest rate for the third time this year.

The government reports the Consumer Price Index (CPI) rose 0.2 percent in August, the same as July, suggesting inflation is largely absent from most of the economy. Much of the increase came in the form of more costly housing and energy.

The Bureau of Labor Statistics' (BLS) energy index rose 1.9 percent, largely due to rising gasoline prices. The cost of shelter rose even more. As we reported Wednesday, consumers paying rent and making mortgage payments are encountering rising costs. The BLS' shelter index jumped 3.0 percent last month.

Food costs were up last month, but only slightly. The cost of food prepared at home was roughly the same as the month before.

The CPI excluding both food and energy -- both highly volatile components -- rose only 0.1 percent in August, the smallest monthly increase since April. Consumers faced lower costs last month for apparel, medical care, communication, recreation, and personal care.

Producer prices fall

On Wednesday, BLS reported the Producer Price Index (PPI), a measure of costs facing producers and wholesalers, actually went down, falling 0.1 percent. The report shows the index was pulled lower by a decline in the cost of services.

The PPI is often viewed as an early indicator of future inflation, since higher costs paid by producers are normally passed on to consumers.

Amid this backdrop of stable prices, consumers' incomes rose slightly last month. The BLS reports real average hourly earnings for all employees increased 0.1 percent from July to August.

Incomes slowly rise

The agency attributes the gain to a 0.4-percent increase in average hourly earnings combined with a 0.2-percent increase in the CPI. Robert Frick, corporate economist at Navy Federal Credit Union, says consumers are getting ahead, but just barely.

"In the race between wage growth and inflation growth, wages edged ahead by a nose, with an annualized gain of 2.9 percent versus 2.7 percent for inflation, so real wage increases are now 0.2 percent, annualized," Frick told ConsumerAffairs. "That's scant comfort for American workers, but with the labor force continuing to tighten and inflation subdued, we may begin to see real wage growth climb to a percentage point or more in the next year, which would be typical - and welcome - for this late stage of an expansion."

Consumers may be taking home a little more money because they're working harder. The BLS report shows there was a 0.6 percent increase in the average workweek over the last 12 months.

On the heels of the Conference Board's finding that consumer confidence is at an 18-year high, the government reports consumers increased their spending again in July.

The Commerce Department's Bureau of Economic Analysis (BEA) reports consumer spending rose 0.4 percent in July, matching June's increase. As a result, government economists say it put upward pressure on prices. The underlying inflation rate hit 2 percent in July, which is right where the Federal Reserve wants it.

Economists say the strong spending number suggests the economy is still expanding in the third quarter, after the government this week reported second quarter gross domestic product (GDP) rose 4.2 percent.

The numbers are likely to keep the Federal Reserve on its path of slowly raising interest rates, a policy recently criticized by President Trump as potentially harmful to the economy. But Fed Chairman Jerome Powell has defended the policy, saying the economy is growing to the point that it no longer needs cheap money.

Two headwinds

Economists say the economy is doing well in spite of two headwinds – the impact of the trade war and a slowdown in the housing market. In terms of the latter, Economist Joel Naroff says the slowdown may have a silver lining for people looking for a home.

“With housing sales ebbing, it should not be surprising that the surge in prices is fading as well,” Naroff wrote in his blog. “The S&P CoreLogic Case-Shiller national home price index rose modestly in June. Over the year, prices are still going up solidly, but it looks like the rate of gain may have peaked.”

But houses may be the only thing that isn't getting more expensive. The BEA data shows a rising trend in the personal consumption index (PCE) in July, double the increase from June.

The year-over-year increase of the core PCE price index, which excludes food costs, rose slightly from June and hit the Fed's 2 percent target for the second month this year.

Incomes lagging

Consumers may be spending more, but they aren't earning that much more. July's personal income rose 0.3 percent in July, slightly lower than June's gain. The savings rate declined from 6.8 percent to 6.7 percent.

That suggests much of the increase in July consumer spending was done with credit cards, which isn't a problem as long as consumers can pay it back.

In one troubling note, however, a new study by NerdWallet suggests consumers were having a difficult time paying for last year's holiday purchases. According to the study, credit card delinquencies totaled $23 billion in the first quarter of the year.

Wall Street tends to obsess over whether the Federal Reserve will raise interest rates, but most consumers pay little attention. Rates are still low by any historical measure.

But lately President Trump has entered the conversation, criticizing Fed Chairman Jerome Powell, a man he appointed, for continuing to raise the federal funds rate, which is now fluctuating between 1.75 and 2 percent.

In a speech today at the Fed's retreat in Jackson Hole, Wyo., Powell suggested the policymakers would stick to their schedule of slowly raising the key interest rate. The reason, he said, is simple. The economy is strong and the Fed must walk a tight line between not snuffing out growth and not allowing an overheated economy to produce runaway inflation.

“Over the course of a long recovery, the U.S. economy has strengthened substantially,” Powell said. “The unemployment rate has declined steadily for almost nine years and, at 3.9 percent, is now near a 20-year low. Most people who want jobs can find them. Inflation has moved up and is now near the Federal Open Market Committee's (FOMC) objective of 2 percent after running generally below that level for six years.”

Good times should continue

Powell says the Fed expects those positive economic trends to continue, especially with the added stimulus of last December's big tax cut.

There are troubling issues facing the economy, however. Powell notes that wage growth has lagged behind the rest of the economy. He also expressed concern about the growing federal deficit, especially now that so many baby boomers are drawing Social Security and Medicare.

While it might seem odd that there is debate over whether a 2 percent interest rate is too high, it should be remembered that the key rate spent years at zero percent following the financial crisis. The Fed has raised the rate seven times since late 2015 and is projected to raise it again two more times this year.

Dissenting view

Not all of Powell's Fed colleagues are on board with his policy of continuing to boost the federal funds rate. In an interview with CNBC, St. Louis Fed President James Bullard said he thinks there should be no more rate hikes for the remainder of this year.

"I just don't see much inflation pressure,” Bullard said. “I'm an inflation hawk, but I just don't see that developing.”

Even so, Fed watchers fully expect another quarter-point hike in the federal funds rate at the September meeting.

The Consumer Price Index (CPI) rose 0.2 percent in July, putting the inflation rate for the last 12 months at 2.9 percent, slightly above the Federal Reserve's target.

July's increase in the cost of living was led by the cost of putting a roof over your head. The shelter index jumped 0.3 percent last month, accounting for nearly 60 percent of the seasonally adjusted monthly increase in the Bureau of Labor Statistics' all items index.

Food costs were up by a more modest amount last month while energy prices were sharply lower.

Consumers' paychecks were mostly the same last month. Real average hourly earnings for all employees were unchanged from June to July on a seasonally adjusted basis.

Most consumers aren't getting ahead

Robert Frick, corporate economist at Navy Federal Credit Union, says the inflation and income numbers are a mix of good news and bad news.

"The CPI numbers reflect a strong economy, and are in line with estimates," Frick told ConsumerAffairs. "Most of the pressure on prices is coming from robust consumer spending fueled by more Americans working, and from continued high consumer confidence. Unfortunately, the rate of inflation at 2.9 percent annually now slightly exceeds average wage gains, so real wages just ticked to negative."

That means workers' paychecks are not keeping up with inflation and could cause more consumers to fall behind financially.

"For Americans to benefit more from the expansion, real wage growth needs to be positive as it usually is in this phase of an expansion," Frick said. "Americans are being hit particularly hard in shelter costs, which are up 3.5 percent in the last year.

Record high home prices

In fact, even though home sales have slowed in recent months, the rise in home prices hasn't. Earlier this week, the National Association of Realtors (NAR) reported that the median sale price for an existing home in the second quarter hit a record high of $269,000, 5.3 percent more than in the second quarter of 2017.

"The unaffordable conditions in many of the largest metro areas – especially in the West – continues to be a growing concern for many middle-class households aspiring to buy a home," said Lawrence Yun, NAR's chief economist.

"Homebuilders, facing higher costs and labor shortages, are simply not producing enough affordable homes to satisfy demand. Local governments need to acknowledge this glaring issue and ease some of the zoning laws, permitting processes and regulations that are slowing construction."

But home prices and rents weren't the only consumer expenses moving higher last month. The government report shows consumers also paid more for new and used cars and trucks, airline fares, household furnishings, and recreation.

The Federal Reserve Open Market Committee concluded its regular meeting today, saying it was keeping the federal funds interest rate at its present level, between 1.75 percent and 2 percent.

The Fed has been raising the rate about three times a year since late 2016 after a decade of keeping it near zero percent. As the economy has recovered, the Fed has said it wants to “normalize” rates so they can be lowered again in the event of another recession.

In its statement following its meeting, the Fed said all indications show the labor market has continued to strengthen and economic activity has been rising at a strong rate. Other positives include strong increases in household spending and business investment.

Inflation remains near 2 percent

“On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance,” the Fed said in a statement.

A hike to the discount rate was not expected. Nonetheless, it is good news for consumers carrying credit card balances. Credit card rates usually move in tandem with the discount rate, as do banks' prime rates.

Meanwhile, mortgage rates may be moving higher, and it has nothing to do with the Federal Reserve. Mortgage rates are closely tied to the yield on the Treasury's 10-year bond, which rose to 3 percent today for the first time since June.

The yield rose when a report showed private payrolls increased more than expected last month. In digesting that news, bond traders pushed yields higher on the belief that the economy is heating up, raising the prospect of higher inflation.

The cost of living barely budged in June, but so did workers' wages.

The Labor Department reports the Consumer Price Index (CPI) rose 0.1 percent last month, with the increase largely due to higher prices for food, shelter, and gasoline.

Food prices were up 0.2 percent, both for food prepared at home or ordered at a restaurant. While gasoline prices were higher, other forms of energy actually cost less last month.

Even though overall food prices were slightly higher, the price of meats, poultry, fish, and eggs declined in June, falling 0.6 percent. Pork prices went down after U.S. trading partners slapped tariffs on pork, slowing U.S. sales to other countries.

Real average hourly earnings also rose 0.1 percent last month. Wages were slightly higher when computed on a weekly basis. Other data reported this week shows more workers quitting their jobs to accept positions that pay more.

Nothing to deter the Fed

On an annual basis, the inflation rate is running at 2.9 percent, slightly higher than the Federal Reserve's target. For that reason, Robert Frick, corporate economist at Navy Federal Credit Union, says he sees nothing in the June report that would deter the Fed from raising interest rates two more times this year.

"However, a tight race is being run between consumer price increases and wage increases, and for most workers, wages are losing," Frick told ConsumerAffairs. "The U.S. Bureau of Labor Statistics also reported this morning that for production and non-supervisory employees, real (adjusted for inflation) average hourly wages dropped 0.2 percent in the last year."

Frick says the numbers show that when management employees are counted, wages were flat.

"The only factor giving all workers more money in their pockets is that the average workweek in the last year grew slightly, increasing real average weekly earnings 0.2 percent," he said. "This is scant comfort."

Frick says in the latter stages of the last economic recovery, workers enjoyed a 3.3 percent increase in wages.

The government's Producer Price Index (PPI), a measure of inflation for goods and services at the wholesale level, rose 0.3 percent in June after rising 0.5 percent in May.

On a year-over-year basis, costs at the production level are up 3.5 percent, the highest since 2011. Price increases at the production level are usually passed on to consumers in the form of higher retail prices.

The Bureau of Labor Statistics reports most of the June increase came in the form of higher costs for services.

Prices for services rose 0.4 percent in June, the largest gain since a 0.5 percent rise in January. In June, half of the broad-based increase in the index for services took the form of trade services, where acute labor shortages have recently been reported.

Higher oil costs a main driver

Not surprisingly, more than 40 percent of the price increase in services can be traced to a 21.8 percent jump in fuels and lubricants. With the steady rise in oil prices over the last couple of months, refiners have faced higher costs in producing gasoline and diesel fuel.

But inflation wasn't limited to energy. The June Index shows rising prices for hospital outpatient care; health, beauty, and optical goods retailing; truck transportation of freight; automobiles and automobile parts retailing; and food retailing.

However, there were some notable price declines last month at the production level for apparel, footwear, and accessories retailing. The indexes for inpatient care and airline passenger services also decreased last month.

The producer prices for actual goods barely moved higher last month. The biggest increase came in the wholesale price of motor fuels. But that was largely offset by a large drop in the cost of food products, which fell 1.1 percent.

Costs at the production level usually get passed on to consumers, but not always. In competitive areas, like food and apparel, some wholesalers absorb small price increases if they think consumers will be unwilling or unable to pay them.

Inflation ticked up in May, hitting the Federal Reserve's target of 2 percent for the first time since 2012. But in good news for consumers, a government report shows incomes rose even more.

The Commerce Department reports the personal consumption expenditures (PCE) price index rose 0.2 percent last month on the heels of a similar gain in April. In the last 12 months, the PCE price index – which is closely monitored by the Fed – is up 2.3 percent.

At the same time, consumers' incomes rose 0.4 percent in May, following a 0.2 percent gain in April. Wages were up 0.3 percent and the savings rate climbed to 3.2 percent.

Healthy expansion

Robert Frick, corporate economist with Navy Federal Credit Union, says the report paints a mostly upbeat picture.

“Nothing in the Personal Income and Outlays report this morning casts doubt on the health of the expansion, or on the Fed's plan to raise interest rates two more times this year,” Frick said in an email to ConsumerAffairs. “The good news for American workers is personal income increased as expected, so hope remains that wages— which have been eroded by inflation the last year — will rise above their current level and workers' purchasing power will increase.”

Frick says the rise in inflation is no cause for concern because it is still at a relatively low rate. Besides, it is only now hitting the level the Fed has decided is healthy for a growing economy.

Consumer spending was down

“That consumer expenditures dipped is also not a cause for concern,” Frick said. “That is a particularly volatile figure, and if accurate reflects that consumers are channeling more towards savings, which has been bumping at historically low levels.”

Consumers also spent less on their utility bills in May, since most areas of the country fell between the heating and air conditioning seasons last month. The savings likely contributed to the increase in savings.

The report may quell rising concern on Wall Street in recent days that a potential recession is looming. Stocks have fallen in the last week as traders have fretted over the narrowing gap between the yield on the Treasury's two-year and 10-year bonds, a traditional sign of an economic slowdown.

The Federal Reserve Open Market Committee has ended its June meeting and, as expected, announced a quarter percent rise in its key interest rate.

The Fed's discount rate will now fluctuate between 1.75 percent and 2.0 percent. The Fed is taking that action because the economy continues to improve, the unemployment rate continues to fall, and inflation is slowly creeping back into the economy.

Earlier this week, the Bureau of Labor Statistics reported consumer prices rose 2 percent in May, with inflation at 2.8 percent over the last 12 months. The Fed wants to see some inflation in the economy, but it is hiking rates to keep it under control.

Interest rates that are affected

The rise in the Fed's discount rate affects several types of consumer loans. Most affected are credit card rates, which are already near an all-time high. Most credit card rates are based on the cardholder's credit rating, but nearly all rates are likely to rise to match the Fed's latest increase.

Consumers with home equity lines of credit should also expect to see the interest rate on their balance go higher. The same is true for homeowners with variable rate mortgages.

Those rates are almost always lower than the rate on a 30-year fixed-rate mortgage, but they're going up; however, the fixed-rate mortgage, which is keyed to the yield on the 10-year Treasury note, is not.

The Fed's discount rate also affects auto loan interest rates, but right now the effect may be minimal. That's because dealers are having to offer attractive incentives to sell cars and may be willing to subsidize rates for buyers with good credit. Buyers with poor credit, however, may feel the full effect of the Fed's latest rate hike.

Second hike of the year

The rate hike is the second one this year, and the seventh since the Fed began “normalizing” rates after years of keeping the discount rate at zero percent. Economists predict the Fed will raise rates at least one more time this year, and perhaps two more times before it’s through.

The rising rates cloud may hold a small silver lining for savers. The latest Fed hike puts rates at a level where banks may offer higher interest rates on savings accounts and certificates of deposit (CD) to draw customers.

It would reverse the common practice of the last nine years of paying practically nothing, because the Fed was holding rates at near zero percent. A recent analysis by Value Penguin found the most common interest rate on a savings account in 2018 was 0.01 percent. Ally Bank paid the highest among the banks in the survey – 1.45 percent.

In case you hadn't noticed, inflation is on the rise.

The government reports the Consumer Price Index (CPI) for May rose 0.2 percent on the heels of a similar increase in April. Over the last 12 months, the inflation rate is 2.8 percent, with prices rising faster than incomes.

Costs for gasoline and shelter rose fastest during the month. The gasoline index was up 1.7 percent, even as some other energy costs went down. The overall energy index gained 0.9 percent in May.

The cost of putting a roof over your head, both through rents and purchase prices, rose 0.3 percent last month. Medical costs were also higher, rising 0.2 percent. The index tracking food prices was unchanged.

Incomes don't keep up

Consumers' average hourly earnings posted a small increase in May, rising 0.1 percent. This was mostly due to an increase in the real hourly earnings, combined with an unchanged average work week.

The costs of some things went down in May, but most are not things consumers purchase every month. For example, household furnishings and used cars and trucks cost less in May. Prices for clothing, recreation, and personal care were the same as April.

While the food index was unchanged in May, food inflation over the last 12 months is running at 2.7 percent. Consumers got some relief last month when they purchased food to prepare at home -- including, meat, poultry, fish, and eggs, which dropped 0.7 percent.

Meanwhile, the index for nonalcoholic beverages rose 0.4 percent last month, with cereal and bakery products prices were essentially unchanged.

The latest inflation numbers come as the Federal Reserve's Open Market Committee begins a two-day meeting in Washington, at which it will consider whether to hike the discount rate again. The consensus among economists is a June rate hike is almost a certainty, and that the May inflation numbers have done nothing to change the equation.

Federal Reserve officials say that if inflation rises more than their target, that's not such a bad thing.

The release of the minutes from the latest Fed meeting, normally of interest only to Wall Street, has implications for consumers as well. The record suggests that the Fed isn't as eager to raise interest rates as most economists thought.

For years, Fed policymakers have set 2 percent as a desired inflation rate. That would help businesses expand and, theoretically at least, give workers modest wage increases.

But for years, there was very little inflation in the economy. In fact, in some cases there was deflation, when prices actually went down.

While that sounds like a good thing, it's not. Think back to the housing crisis, when the price of homes plunged, leaving millions of homeowners owing more than their homes were worth, and you begin to see the dangers of deflation.

Temporary inflation is okay

While there are beginning to be signs of inflation in the U.S. economy, Fed officials say that's fine, as long as it's temporary. Oil prices have surged over the last couple of months, for example, but they dropped sharply this week when the government unexpectedly reported a big increase in U.S. oil stockpiles.

Overall, the minutes reflect the belief among Fed officials that inflation will continue to rise, but that modestly rising prices – even if they exceed the 2 percent target – wouldn't hurt the economy.

The Fed's major tool for fighting inflation is its key discount interest rate – the rate it charges banks. Raising it tends to slow economic growth. Lowering it tends to speed it up. After being at zero percent for years, the Fed began slowly raising that rate in 2016 as the economy showed signs of improvement.

If the Fed raises that rate more slowly than expected, consumers won't see some of their interest rates rise as quickly. For example, the discount rate is tied almost directly to adjustable rate loans, auto loans, and credit card rates.

Currently, the discount rate fluctuates between 1.5 and 1.75 percent. Despite the “dovish” sentiment expressed by the Fed officials, the policymakers appear on track to raise their discount rate again in June. The real question is how many more times they do it in the second half of the year.

Inflation hasn't been a factor in the U.S. economy since the financial crisis, but that could soon change.

Two indicators – oil prices and freight transportation – suggest the economy is heating up, and that's usually followed by rising prices.

Oil prices, which have been relatively low since 2014, have surged in the last few weeks. Prices have risen to over $80 a barrel this week, an increase of nearly 48 percent in the last 12 months. UBS, the Swiss investment bank, is warning that the price of oil could go back to $100 a barrel.

Should that happen, consumers would not only face higher gasoline prices; the price of just about everything would go up. UBS warns that a recession can be triggered when prices rise too quickly.

"We should take seriously the possibility of an oil price spike, not least because oil spikes preceded five of the last six recessions in the U.S," UBS economist said in a research note.

Tight shipping market

Economists often find early signs of inflation in the freight transportation industry. And right now, the trucking industry is flashing a warning.

DAT, a freight marketplace, matches trucking companies with loads of freight and has been a reliable indicator of supply and demand. Right now, DAT reports the market is extremely tight.

In the spot market, where vendors look for drivers to move their products, demand has doubled from April 2017 to April 2018. With capacity pressure building in the marketplace, it may only be a matter of time before it will cost more to ship products, which could raise the price of just about everything.

Inflation watch

Economist Joel Naroff, of Naroff Economic Advisors, warned of an inflationary threat last December when Congress slashed tax rates, saying it would further stimulate an already growing economy. Today, he hasn't seen solid evidence that firms are raising prices in the face of increased demand or higher energy prices.

“But backlogs are growing and delivery times are lengthening greatly,” Naroff told ConsumerAffairs. “That is, in effect, a price hike.”

If the trend continues, consumers might soon see higher prices at the supermarket, as well as when they shop online. Air fares might also rise to cover higher fuel costs.

Consumer prices rose a less-than-expected 0.2 percent in April, with gasoline, housing, and food contributing most to the increase.

The Bureau of Labor Statistics puts the Consumer Price Index (CPI) at 2.5 percent over the last 12 months, within the target range set by the Federal Reserve.

Robert Frick, corporate economist with Navy Federal Credit Union, says the core CPI for April -- which strips out food and energy costs -- came in at an even lower 0.1 percent, good news for both consumers and investors.

"With inflation rising slowly, unemployment still falling at a healthy rate, and the Fed unlikely to hit the breaks from inflation fears, the economy still has plenty of room to run," Frick told ConsumerAffairs.

Consumers paid more to fill their tanks last month

For consumers, gasoline was one of the most expensive items in April. Because of the rise in oil prices, which broke $70 a barrel last week, consumers are paying significantly more for fuel than at this time last year. In April, gasoline prices jumped 3.0 percent, even as other energy costs went down.

Food costs were also higher, rising 0.3 percent. But in April, the cost of dining out actually rose slower than the cost of eating at home.

The cost of putting a roof over your head also rose in April. The CPI shelter index gained 0.3 percent, followed by price increases for home furnishings, medical care, and personal care.

Among the categories where prices declined were airfares, new and used cars and trucks, and recreation.

Wall Street cheered the news because the tame inflation number makes the Fed less likely to aggressively raise its discount rate. That not only helps the stock market, consumers also benefit when they add to their credit card balance, finance a car, or take out an adjustable rate mortgage.

The government's gauge of consumer prices fell in March, pulled lower by an unexpected decline in gasoline prices.

The Consumer Price Index (CPI) fell 0.1 percent after rising 0.2 percent in February. It was the first drop in prices in almost a year.

That's not to say everything was cheaper last month. The costs of food, shelter, and medical care were all higher in March, but they were outweighed in the CPI by a 4.9 percent drop in prices at the pump.

When you strip out food and energy from the March index, prices were up a modest 0.2 percent, in line with estimates. Over the last 12 months, inflation is running at a rate of 2.4 percent.

That's the largest 12-month increase since March 2017 and higher than the 1.6 percent average annual rate over the past 10 years. Energy prices were up 7.0 percent over the past 12 months, with gasoline up 11 percent.

Rising food costs

Overall food costs rose 1.3 percent last month, with prices for meats, poultry, fish, and eggs rising 0.8 percent. Prices of cereals and bakery products rose 0.4 percent. The cost of dairy products was up 0.3 percent after being up the same amount in February.

The Bureau of Labor Statistics report shows prices for new cars and trucks showed no increase in March, while prices of used vehicles fell 0.3 percent. Prices consumers paid for clothing went down 0.6 percent.

Overall prices were a little softer than most economists predicted. The consensus estimate was for the CPI to match February's level. However, prices could soon resume their upward movement.

On Tuesday the Producer Price Index (PPI), a measure of inflation at the wholesale level, ticked up 0.3 percent, suggesting building price pressure among producers. While those higher prices normally get passed along to consumers, economist Joel Naroff, of Naroff Economic Advisers, says that it's not clear they will in this case.

The cost of living rose in February, but not as much as in January. Lower gasoline prices and moderating rents helped keep inflation in check.

The Labor Department reports the Consumer Price Index (CPI), a measure of the cost of goods and services at the retail level, rose a modest .02 percent last month, slowing from .05 percent in January.

Over the last 12 months, the nation's inflation rate sits at 2.2 percent, just above the Federal Reserve's inflation target of 2.0 percent.

The cost of housing, clothing, and car insurance were all up for the month, while food costs remained the same as in January. In fact, the cost of food prepared at home actually went down last month.

'No cause for alarm'

"Inflation growth moved back into 'no cause for alarm' territory with the February CPI report," Robert Frick, Navy Federal Credit Union’s corporate economist, told ConsumerAffairs.

Frick said many analysts were bracing for bad news based on the big increase in the January CPI. But the February numbers were largely reassuring.

"We saw that auto prices were down significantly, which shows that the impact of the hurricanes last year is finally wearing off, and the trend toward lower vehicle prices is finally kicking in, as predicted," Frick said.

With millions of cars coming off lease, together with slightly lower demand after recent record years, Frick predicts smart car shoppers will find bargains for the rest of the year, and that should offset any increase in car loan rates that have been edging up lately.

Oversized effect of gas prices

But the February numbers may have been influenced by an unusual drop in gasoline prices. A volatile crude oil market and robust refining activity sent retail gasoline prices down nearly a full percent in February. Those prices have largely rebounded this month.

But in some good news for consumers, Frick notes that the tame inflation numbers may persuade the Fed that it doesn't need to boost its discount rate more than three times this year.

Since credit card companies base their interest rates on the Fed's discount rate, that means credit card rates may not rise as much as expected in 2018.

The stock market has taken investors on a wild ride in the past week as stock prices have plunged, giving up all their gains achieved so far in 2018.

The carnage began last Friday, when the government reported a 2.9 percent jump in average hourly earnings in December. That normally good news sent shivers through the bond market, suggesting that wage inflation could be just around the corner. Bond yields, an indicator of interest rates, shot higher.

The Dow Jones Industrial Average, which closed at 26,306 the previous day -- February 1 -- has engaged in wild intraday swings ever since, closing 1,000 points lower at 23,860 Thursday, a loss of nine percent in a week. It's now 949 points lower than where it began the year.

Back to normal

Economist Joel Naroff, of Naroff Economic Advisors, is telling clients that the stock market has finally begun to behave normally again.

"Over the past two years, the NASDAQ had surged 76 percent, the Dow jumped 70 percent and the S&P 500 Index increased 57 percent," Naroff said. "In other words, the equity markets skyrocketed and until the past week, there were no extended down moves."

The economy currently shows signs of strength and corporate earnings are described as spectacular. But Naroff says most of the time the markets were achieving record highs, the economy was just so-so.

"Was it really reasonable to believe the huge stock price rise could continue without any correction?" he asked.

Keep it in perspective

Greg McBride, chief financial analyst at BankRate, says it is important for the average investor, who may have their retirement savings in stocks, to keep the current selloff in perspective.

“The latest decline takes us back to where we were November 17 last year," McBride said. "We’ve just given back some recent gains, not wiped out anyone’s life savings. If you put $100 into the market at the January 26 peak, you’d still have $90.”

McBride says it might be natural to wonder if there's been a fundamental change in the economy when the market sells off like this. But he says nothing is wrong economically, there's just some healthy, overdue price adjustments taking place.

But Naroff sees some economic factors ahead that he says will likely continue to affect stocks. Steep tax cuts and increases in government spending, along with a tightening labor market, could bring on inflation sooner rather than later. Because of that, he expects the stock market to remain a turbulent place for weeks to come.

In her last meeting as Chairman of the Federal Reserve, Janet Yellen announced a key interest rate would remain unchanged for now, but warned of building inflation in the economy.

Both rates and inflation will likely have an impact on consumers in the coming months.

During the final two years of Yellen's tenure, the Fed has slowly raised the federal funds rate, the interest rate at which the Fed loans money to banks. The rate had been slashed to near zero percent during the Great Recession, but now it hovers between 1.25 and 1.50 percent -- still very low on a historical basis.

Under Yellen's successor, Jerome Powell, the federal funds rate is expected to drift higher during the remainder of 2018. Most market economists predict three to four more rate hikes this year, meaning the rate could end 2018 at 2.00 to 2.25 percent.

Rising inflation

In addition to "normalizing" interest rates, the Fed also keeps an eye on inflation. In her final news conference as Fed chairman, Yellen said policymakers see signs that prices are steadily rising.

For consumers, this is not good news, since inflation makes the costs of goods and services more expensive. When the price of things consumers purchase regularly go up -- things like food and gasoline -- it will cut into either consumption or savings unless wages rise by a similar amount.

That said, the Fed would like to see some inflation in the economy, since modestly rising prices can help promote economic growth. The Fed has set a target of two percent inflation for this year.

The problem for consumers is when some items go up in price much faster than the average. For example, home prices rose more than five percent last year. The cost of healthcare and college tuition are rising much faster than the average inflation rate.

The Fed uses interest rate hikes as a way to keep inflation under control since higher interest rates make credit more expensive. Here again, consumers bear some of those higher costs since certain consumer loans tend to follow the federal funds rate.

Higher rates on auto loans and credit cards

Auto loans can be expected to rise with the federal funds rate in some, but not all, instances. Auto loans are largely determined by risk factors, so a consumer with excellent credit might see no rise in interest rates. However, someone with less-than-perfect credit might feel the impact more.

The federal funds rate has the most impact on credit card interest rates, so consumers carrying large balances should prepare for higher interest costs in the future.

"If you're carrying any credit card debt, your interest rate is likely going up with each Fed rate increase,” John Ganotis, founder of CreditCardInsider.com, told us last month. "Almost all credit cards have variable APRs, which means they're tied to the Fed rate."

The average credit card rate is already above 16 percent, so it is possible that four Fed rate hikes in 2018 could raise that average by a point or more, meaning more of a consumer's monthly payment would go to interest and less to paying down the balance.

The Fed's Open Market Committee meets again next month, at which time it could resume the process of raising its key interest rate.

A recent study finds parents often overspend on wedding expenses for their adult children.  

Last year, just 1 in 10 couples paid for their wedding entirely by themselves. The rest looked to mom and dad for financial help on the road to “I do” -- and many parents spent more on their child’s wedding than they had originally planned.

Parents of the bride and groom contributed a combined average total of about $19,000 to the wedding, or about two-thirds of the overall cost, a survey by WeddingWire.com found. Additional findings showed the bride’s parents tend to shell out almost twice as much as the groom’s family -- $12,000 compared to $7,000, on average.

Long-term consequences

One-third of parents surveyed said they spent more on their child’s wedding than they had initially budgeted. One in 5 used a credit card to help with their kids’ wedding costs, and 10 percent used money from a retirement account.

But dipping into your retirement fund to help pay for your child’s wedding probably isn’t a good idea. Offering to help pay for major expenses like your child’s wedding or college education may seem like a kind gesture in the short-term, but it could end up being a financial burden to your children in the future.

Experts argue that it’s more important to make sure you have enough money saved for retirement. By taking care of yourself first, you can help to ensure your kids won’t have to take care of you financially later in life.

Ways to save

It’s clear, however, that many parents want to help ensure their child has the wedding they always wanted. Over a third of parents surveyed took it upon themselves to initiate the conversation about paying for the wedding.

While there’s nothing wrong with helping to pay for an adult child’s wedding, parents should keep their budget in mind. Going overboard on wedding costs won’t benefit you or your child in the long run.

Here are a few ways to help keep wedding costs down:

• Change the day of the week. Weekend wedding dates are in high demand for vendors, which means you’ll likely end up paying more. But vendors are often willing to give you a better rate if you have the wedding on a weeknight or a Sunday.

• Find a local venue. A beautiful, budget-friendly venue may be closer than you think. Charming settings for an exchange of vows include parks, art galleries, community centers, local bed and breakfast inns, or even the backyard of a family friend or relative.

• Keep invites casual. In lieu of fancy engraved invitations, consider finding a cheap wedding invitation online. Printing your own invites from your home computer can be a big money-saver. Save even more by forgoing reply cards and asking guests to RSVP online or by telephone.

• Save on spirits. Alcohol is one of the biggest expenses to come out of a wedding reception. To keep your beverage budget to a minimum, consider limiting the types of alcohol that are available to guests at no cost. Instead, have a wider variety available at the cash bar. Making it a B.Y.O.B. affair can also help cut costs.

• Save in advance. If it’s important to you to help pay for your child’s wedding, then start saving a little from each paycheck as soon as possible. One in 4 parents in the WeddingWire survey set aside cash specifically for their child's wedding. More than half of those started saving when that child was a teenager.

Home prices may still be rising, but mortgage interest rates are moving in the other direction, giving buyers a small break.

Bankrate reports rates are lower for the third straight month, with the average rate of a 30-year fixed-rate mortgage dropping to the lowest level in more than six months. The average rate is 4.09% this week, the lowest since the middle of November.

Mortgage rates typically follow the rate on the Treasury's 10-year bond, and lately that rate has moved lower, even though the Federal Reserve has signaled that it plans to keep raising the Federal Funds Rate. The Federal Funds Rate has a big impact on the interest you pay on your credit card, but it has little to do with mortgages.

Bankrate notes that inflation has cooled, consumer spending has softened, and ongoing questions about a brewing White House scandal has created uncertainty among investors. All have combined to push bond rates lower.

Current rates

Bankrate reports the average 30-year mortgage rate dropped from 4.13% the previous week. It says the 15-year fixed rate mortgage rate is 3.31%, nearly flat with the previous week. The 5/1 ARM rate is 3.41%, also nearly the same as the week before.

At the current average 30-year fixed mortgage rate of 4.09 percent, the monthly payment for a $200,000 loan is $965.24.

With interest rates still near historic lows, home sales should be surging but they aren't. The main reason for that is a lack of homes for sale, especially in cities with strong job markets. Lawrence Yun, chief economist for the National Association of Realtors (NAR), sees no increase in inventory coming anytime soon.

Yun says homebuilders have not increased production and investors who bought foreclosures during the housing crisis, converting them to rentals, have shown no indication they plan to begin selling them. Until both situations change, he says, inventory levels are likely to remain tight.

How far your money goes each month often depends on where you live. It's a fact of life that it just costs more to live in some places than others. Main drivers include the cost of housing, groceries, insurance, transportation, healthcare, and basic services.

Why bring it up? Because for many people, moving might be the easiest way to increase their disposable income.

For example, a young person just starting out might be working in retail but living in a large city. By moving to a smaller city, with a lower cost of living, their money might go farther. After all, the same retailer probably pays the same in both places.

The same is true for someone who has just retired. While they were working, living in an expensive city might have been just fine, but not so fine when their income is reduced, and fixed.

State-by-state analysis

GOBankingRates.com, a personal finance site, has analyzed the cost of living in each state and measured it against the national average cost of living. In doing so, it has compiled two lists – the five most expensive states in which to live and the five cheapest.

Hawaii is the most expensive, for a couple of reasons. First, lots of people would like to live there. Second, everything costs more in Hawaii because it's an island chain in the middle of the Pacific Ocean. It costs a lot to get things delivered there. For example, Hawaii has the highest gasoline prices in the U.S.

While Hawaii's cost of living is 67.4% above the national average, Washington, DC's cost of living is the second highest, at nearly 50% above the average. In DC, housing is the big driver. Homes and apartments in the nation's capital cost 134% above average.

New York, California, and Massachusetts round out the five most expensive states, and are very close in terms of costs. They range from 35.2% to 34.7% above average.

Housing is also a big cost driver in California, where costs are 92.7% above average. California also has the second-highest transportation costs in the nation.

Where your money goes farther

Where can you move to stretch your dollars? Mississippi tops the list, with a cost of living 14% below the national average. In Mississippi, housing costs are 31.6% below the national average. Its gasoline prices are among the cheapest in the country.

The second most affordable state is Indiana, with a cost of living 12.1% below average. Michigan is reasonable too, coming in at 11.8% below average. Arkansas and Oklahoma are not far behind, at 11.5% and 11.4% respectively.

Some states that didn't make either top five list nonetheless are very cheap or expensive in certain categories. For example, Alaska has the highest healthcare costs in the country, while Alabama has the lowest.

Last week, the price of gold rose to its highest level in five months. After plunging in the aftermath of last November's election, prices were at their best since last June, finishing at $1,286 an ounce.

Why is the precious metal soaring again? There are a couple of reasons.

Gold is usually a safe haven when there is fear of turmoil. President Trump's sudden and unexpected rocket attack on a Syrian airfield and building tension with North Korea have created new geopolitical uncertainty.

Also last week, Trump gave an interview in which he said he thought the dollar is too strong. A strong dollar makes U.S. exports more expensive.

Trump's comments caused the dollar's value to sink on world currency exchanges, and since gold is priced in dollars, that caused the relative price of gold to rise.

The fear factor

Gold is traditionally impacted by the fear factor. When there is fear of political or economic upheaval, the price normally goes up.

Financial advisors often suggest everyone's portfolio should contain a little gold as a hedge against uncertainty, but that doesn't mean you need to rush out and buy it at these prices.

Mitsubishi analyst Jonathan Butler told Canada's The Globe and Mail that the precious metal has moved into “overbought territory” after its recent run-up. Still, there are plenty of analysts who think the long-term outlook for the precious metal is bullish.

In an interview with CNBC, U.S. Global Investors CEO Frank Holmes attributed much of gold's recent moves to real interest rates.

“What we saw last year is real interest rates in the U.S. went positive and gold sold off, then (this year) they went negative again, and gold has had a rally,” he told the business news network.

How to buy it

Holmes recommends that 10% of investors' portfolios be weighted in gold. The question is, how to buy it. There are several ways, and your politics and level of fear might influence your choice.

Conservatives, for example, tend to like physical gold – gold they can stash away in case the economy collapses. During the Obama years, cable TV was cluttered with commercials for physical gold bars and coins.

While you might feel secure having gold in your possession, you have to have a secure way to store it. Also, you should exercise caution when buying gold coins to make sure you understand how much gold they actually contain and how much the dealer is marking them up.

Gold stocks

An easier way to own gold is by owning gold stocks, which you can buy and sell through your online brokerage account. SPDR Gold Shares (GLD), for example, is an exchange traded fund (ETF) that tries to reflect the moving price of physical gold bullion. It actually holds the physical gold so you don't have to. You buy shares, just like you would stocks, making it easier to liquidate your holdings than if you were holding physical gold yourself.

Another way to get gold exposure is to own gold mining stocks. These ETFs invest in shares of various gold mining companies.

The stock price tends to rise and fall with the price of gold, but there is the added advantage of owning a piece of actual companies that tend to be well-run and may return a portion of their profits in the form of dividends.

An experienced and knowledgeable dealer can help you find the best prices for gold, silver, and other precious metals. The ConsumerAffairs Buyers Guide to Gold can help. It contains reviews from both experts and consumers and compares many of the larger dealers. You should also be sure to consult with your financial advisor about any investment. 

Falling gasoline prices helped push the cost of living lower in March.

Figures released by the Bureau of Labor Statistics (BLS) show the Consumer Price Index (CPI) was down a seasonally adjusted 0.3% last month, the first one-month decline since February 2016.

The March decrease held price increases to 2.4% over the last 12 months.

Falling energy costs

Energy prices were down 3.2% in March following February's drop of 1.0%. Gasoline led the decline, plunging 6.2%, followed by natural gas (-0.8%) and electricity (-0.1%).

Over the last year, energy prices rose 10.9%, with gasoline surging 19.9%, natural gas up 10.3%, and electricity gaining 1.6%.

Food prices rise

The cost of food was up 0.3%, with grocery prices rising 0.5% following a 0.2% increase in February.

Four of the six major grocery store food groups rose, with fruits and vegetables gaining 1.6%, and cereals & bakery products and meats, poultry, fish & eggs both up 0.3%. In contrast, the cost of dairy and related products fell 0.6% and nonalcoholic beverage prices slipped 0.1%.

Core inflation

The “core” inflation rate, which strips out the volatile food and energy categories was down 0.1% last month, and up 2.0% over the past 12 months.

The March decline came as communication prices fell 3.5%, along with drops in the costs of used cars and trucks (-0.9%), new vehicles (-0.3%), and clothing (0.7%).

Price increases were registered in housing (+0.1%), medical care (+0.1%), motor vehicle insurance (+1.2%), tobacco (+0.5%), airline fares (+0.4%), and alcoholic beverages (+0.2%).

Recreation, education, and household furnishings & operations costs were unchanged.

The complete report is available on the BLS website

The Department of Labor's (DOL) Consumer Price Index (CPI) posted its smallest advance since last July -- rising just 0.1% in February. That put the gain over the last 12 months at 2.7%.

The slight monthly increase came as gasoline costs fell, partially offsetting increases in other categories including food, housing, and recreation.

Energy down, food on the rise

Energy prices fell 1.0%, in February, its first decline since last July, with gasoline costs down 3.0%. Other major components were up, with natural gas rising 1.5% and electricity increasing 0.8% -- its first advance in four months. Over the past year, energy costs are up 15.2% with all of its major components rising.

Food costs were up 0.2% following January's 0.1% increase. Grocery prices, or food at home, rose 0.3% -- the sharpest advance since June 2015. Four of the six major grocery store food groups were higher: nonalcoholic beverages (+1.5%), dairy and related products (+0.8%), fruits and vegetables (+0.7%), and meats, poultry, fish & eggs (+0.2%). Cereals and bakery products and other food at home both fell 0.4%. Over the last 12 months, grocery prices are down 1.7%.

Food away from home (restaurant prices) rose 0.2% last month after an increase of 0.4% in January. Over the last 12 months, food away from home is up 2.4%, leaving the overall price of food unchanged.

Core inflation

Prices for all items, excluding the volatile food and energy categories, were up 0.2% in February, with the costs of housing, recreation, clothing, airline fares, motor vehicle insurance, education, and medical care among those that increased. Decliners included communication, used cars & trucks, new vehicles, and household furnishings and operations.

For the 12 months ending in February, this “core” rate of inflation was up 2.2% -- the 15th straight month it's been in the range of 2.1-2.3 percent. 

The complete report is available on the DOL website.

The cost of living one step shy of the consumer level -- referred to by the Bureau of Labor Statistics (BLS) as the Producer Price Index (PPI) for final demand -- rose at a seasonally adjusted rate of 0.3% last month.

For the 12 months ended February 2017, wholesale prices were up 2.2%, the largest advance since an increase of 2.4% in the 12 months ended March 2012.

Services and goods on the rise

Over 80% of the February advance was due to a 0.4% increase for services, the sharpest since last June. A major factor in the increase was the 4.3% surge in the price of traveler accommodation services. Costs for chemicals and allied products wholesaling; legal services; apparel wholesaling; health, beauty, and optical goods retailing; and architectural and engineering services also moved higher.

Offsetting those increases was a 10.0% plunge in the price of automotive fuels and lubricants retailing, along with declines in the costs of wireless telecommunication services and for securities brokerage, dealing, and investment advice.

Prices for goods were up 0.3%, the sixth consecutive rise. Over half of that was due to energy costs, which were up 0.6% with electricity prices surging 1.6%.

Prices for fresh and dry vegetables, jet fuel, liquefied petroleum gas, pharmaceutical preparations, and residual fuels also rose.

Gasoline costs were down 2.5%, while prices for beef and veal, and for search, detection, navigation & guidance systems, and equipment also decreased.

The core rate of inflation, which excludes the volatile food and energy categories, rose 0.3%.

The complete report is available on the BLS website.

It's easier to accomplish something if you have a reason for wanting to do it. So when it comes to your finances, setting goals will help you stick to your budget and avoid costly mistakes.

It turns out that setting financial goals is something financially fit consumers do on a regular basis – whether it's setting up an emergency fund, saving for retirement, or putting a down payment on a home, having a goal in mind is a key to success.

Diane Moogalian, Vice President, Customer Care, Equifax, says building up savings should be priority number one for most consumers.

“Having a savings account is a great way to help prevent things like having to use a credit card unwisely to pay for things you didn’t plan for,” she said. “Having a savings account can also be a great way to help you financially plan for things like a new car, a new home, education, and your retirement.”

Paul Golden, spokesman for the National Endowment for Financial Education, suggests consumers set a goal of saving 10% of their take-home pay.

“If you have regular paychecks, schedule an automatic transfer of 10% each time you get paid,” Golden told ConsumerAffairs.

He also suggests looking into the tax advantages offered by retirement savings accounts like Roth or Traditional IRAs.

Paying down debt

Michelle Perry Higgins, Principal and Financial Planner of California Financial Advisors, says other important financial goals might include paying off debt.

“As you age, your debt should be decreasing and your retirement and emergency reserve contributions should be increasing,” she said.

One result of focusing on financial goals is a consumer develops other good habits that eventually lead to financial stability – less debt and more assets. Bruce McClary, Vice President of Communications for the National Foundation for Credit Counseling, says these goals will change as a consumer ages.

“Millennials who financed a college education are likely to be focused on paying down their student loan balances while trying to provide for their basic living expenses,” McClary said. “Retirement savings is also a goal for those starting out as well as people in their 30s and 40s. Older individuals are likely focused on streamlining their budget as they prepare for or enter retirement.”

Making the most of financial resources

As consumers get ready to retire, they should make the most of their financial resources.

“Basic needs take priority while discretionary expenses take a secondary position in the order of importance,” McClary said.

Moogalian says being financially-fit is a lot like being physically fit. The way to achieve that fitness requires different activities for each stage of life. But like physical fitness, she says the key is sticking to it.

Since the day after election day, Wall Street has been on a tear, with the major stock averages moving into record territory day after day.

Analysts say much of the advance has been due to a change in economic outlook. A Trump administration is expected to spend more on infrastructure and lower the corporate tax rate. That, in turn, is expected to spur economic growth.

Treasury Secretary-designate Steve Mnuchin is on record predicting sustained economic growth of 3% or more.

But the euphoria may be a bit premature, some analysts caution. The stock market, specifically, has already priced in the economic growth that has yet to be achieved. And the economic advancement might not be as easy as it sounds.

Contrarian view

John Connaughton, an economist at the University of North Carolina (UNC) Charlotte takes a somewhat contrarian view. He expects the same slow pace of economic growth to continue for a while.

“During the first half of 2016, the North Carolina economy seemed to experience slower growth than during the previous 18 months,” he said. “What has been happening in North Carolina during the first half of 2016 is not dissimilar to what has happened in the U.S. It seems that after seven years of economic expansion, the economy has begun to slow.”

Many consumers who are struggling to keep up may be surprised to learn that the U.S. economy has been expanding for 89 months. It's just been at a very slow pace.

But Connaughton says the current economic expansion is the fourth-longest on record, going back to 1854. And despite the post-election rise in business and consumer confidence, he doesn't expect much to change, in the way of economic growth, in the coming year. Economic headwinds, he says, include falling productivity and the retirement of the Baby Boomer generation.

Economists largely skeptical

An early December poll by Reuters found the Trump bump that has boosted the stock market hasn't really changed economists' outlook, who note that recessions are regular occurrences, even if the expansion has been less than robust.

The economists in the poll correctly predicted the Federal Reserve's decision this week to hike short term interest rates. Fed Chair Janet Yellen held out the prospect of three additional hikes in 2017, suggesting a more optimistic outlook for economic growth.

But at the same time, Yellen left herself some wiggle room, suggesting the Fed could always hold off on normalizing rates if economic growth doesn't measure up to rosy expectations.

The  Department of Labor (DOL) reports prices were up a seasonally adjusted 0.4% in October and have jumped 1.6% over the last 12 months.

As was the case in September, rising gasoline and housing costs were behind the increase in the CPI. The 7.0% surge in the cost of gas accounted for more than half of the increase. Housing prices rose 0.4% for a second straight month.

Energy prices post significant gain

The cost of energy, due largely to the aforementioned increase in gas prices, was up 3.5% last month -- the sharpest advance since February 2013. Fuel oil costs rose 5.9%, while electricity and natural gas prices rose 0.4% and 0.9%, respectively.

Over the last 12 months, energy prices are up just 0.1%, the first 12-month increase since August 2014.

Food prices hold steady

The cost of food was unchanged in October for the fourth straight month. The food away from home category (restaurant costs ) inched up 0.1%, while food at home (groceries) fell 0.2%, the sixth decline in as many months

The prices of nonalcoholic beverages fell 0.4%, meats, poultry, fish, and eggs were down 0.7% -- the 14th consecutive monthly decline, and miscellaneous grocery prices were off 0.1%. Costs for cereals and bakery products were unchanged, while fruit and vegetable prices inched up 0.2%, and dairy and related products increased 0.3 %.

Grocery prices over the last 12 months are down 2.3%, the largest 12-month decline since December 2009. The cost of eating out, on the other hand, is up 2.4% over the last 12 months.

Core inflation

The cost of all items, excluding the volatile food and energy categories -- the “core rate” of inflation -- rose 0.1% for the second straight month.

Along with housing, prices for apparel, new vehicles, and motor vehicle insurance rose in October, along with education, household furnishings and operations, alcoholic beverages, and tobacco. Personal care, communication, used cars and trucks, recreation, and airfare costs all declined. Medical care prices were unchanged.

The core rate of inflation rose 2.1% for the 12 months ending in October and has remained in the narrow range of 2.1% to 2.3% since December 2015.

The complete report may be found on the DOL website.

Jobless claims

Also from DOL, word that filings of first-time applications for state unemployment benefits plunged by 19,000 in the week ending November 12 to a seasonally adjusted total of 235,000.

That's the lowest level in 46 years. It also marks 89 consecutive weeks of initial claims below 300,000 -- the longest streak since 1970.

The four-week moving average, a more reliable gauge of the labor market because of its lack of volatility, came in at 253,500 -- a decline of 6,500 from the previous week.

The complete report is available on the DOL website.

It's not much, but monthly Social Security and Supplemental Security Income (SSI) payments will be going up next year.

The Social Security Administration reports more than 65 million recipients will see a 0.3% increase in their benefits in 2017.

The more than 60 million Social Security beneficiaries will see the cost-of-living adjustment (COLA) starting in January, while increased payments to more than 8 million SSI beneficiaries will begin later this year -- on December 30.

The Social Security Act ties the annual COLA to the increase in the Consumer Price Index (CPI) as determined by the Department of Labor (DOL).

Some give, some take

Other adjustments aren't nearly as pleasant.

Based on the increase in average wages, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will jump to $127,200 from $118,500. That means roughly 12 million workers will pay more because of the increase in the taxable maximum.

Information about Medicare changes for 2017 have yet to be announced, but some beneficiaries may see their benefit increase or be partially or completely wiped out by increases in Medicare premiums.

Consumer prices on the rise

Meanwhile, DOL reports the CPI rose 0.3% last month on a seasonally adjusted basis, due in large part to increases in the costs of gasoline and shelter.

Gasoline prices soared 5.8%, while housing costs were up 0.4% -- the largest increase since May.

Food prices, meanwhile, were unchanged for the third consecutive month, with the food at home (grocery store prices) continuing to decline.

Core inflation

The price of items less food and energy -- the “core” rate of inflation -- was up 0.1% after rising 0.3% in August. For the 12 months ending in August, core inflation is running at a rate of 2.2%.

The complete report is available on the DOL website.

The government's Consumer Price Index (CPI) rose slightly in August as steady food and energy costs mitigated increases in rising shelter and health care prices.

The Bureau of Labor Statistics (BLS) reports the CPI was up a scant 0.2% last month, with prices over the last 12 months gaining 1.1%

Food costs hold steady

As it was a month earlier, the cost of food was unchanged in August, with food at home -- grocery store prices -- falling 0.2%. Meats, poultry, fish, and eggs were down 0.4%, the 12th decline in a row. The “other food at home” category fell 0.2%, and prices for nonalcoholic beverages dipped 0.1%. The remaining major grocery store prices were all unchanged in August.

During the past 12 months, food prices overall were unchanged -- the first time that's happened since the 12 months ending February 2010. Grocery store prices were down 1.9% over the past 12 months.

Energy costs unchanged

The price of energy held steady after declining in July, with gasoline and fuel oil down 0.9% and 2.5%, respectively. Natural gas, on the other hand, was up 2.1% after surging 3.1% in July. Electricity rose 0.5%, the same increase as in July.

Energy prices have declined 9.2%, with gasoline down a whopping 17.8% and fuel oil dropping 12.8%.

Core inflation

The costs of living excluding the volatile food and energy categories -- what's known as the “core” rate of inflation -- was up 0.3% in August, led by medical care (+1.0%) and shelter (+0.3%). Other increases came in prices for motor vehicle insurance (+0.5%), apparel (+0.2%), and tobacco (+0.7%).

Declining prices were seen for used cars and trucks (-0.6%), as well as household furnishings and operations, recreation, and airline fares (all -0.1%).

The core rate of inflation over the past 12 months was up 2.3%, led by motor vehicle insurance (+6.5%), medical care (4.9%), and shelter (+3.4%).

The full report may be found on the BLS website.

The cost of living rose in June for a fourth consecutive month.

According to the Department of Labor (DOL), the Consumer Price Index (CPI) increased at a seasonally adjusted annual rate of 0.2% largely on the strength of a jump in gasoline prices. For the last 12 months, prices are up 1.0%.

Energy prices were up 1.3% -- the fourth straight increase, although they're down 9.4% over the past year.

The big factor in the June increase was a surge of 3.3% in the cost of both gasoline and fuel oil. Meanwhile, electricity prices fell 0.5% and natural gas dipped 0.4%.

Food prices fall

The cost of food slipped 0.1% on top of a decline of 0.2% in May. Four of the six major grocery store food groups were lower: meats, poultry, fish, and eggs (-0.7%), nonalcoholic beverages (-0.7%) -- its largest decline since May 2013 -- dairy and related products (-0.3%), and fruits and vegetables (-0.1%) percent.

Over the past year, what's known as the food at home category is off 1.3%, its largest 12-month decline since February 2010.

Core inflation

The “core rate” of inflation, which strips out the volatile food and energy sectors, was up 0.2% in June. The cost of shelter led the way with a gain of 0.3%, with medical care, education, airline fares, motor vehicle insurance, and recreation also rising. On the other hand, prices for used cars and trucks, apparel, communication, and household furnishings and operations were lower.

For the 12 months ending in June, the core rate of inflation was up 1.0% -- the same increase as for the 12 months ending in May, but well below the 1.7% average annual increase over the past 10 years.

The complete June CPI report is available on the DOL website.

A nearly 10% surge in the wholesale price of gasoline sent the Producer Price Index (PPI) for final demand higher in June for the third month in a row.

The Bureau of Labor Statistics (BLS) reports the advance of 0.5% followed increases of 0.4% in May and 0.2% in April.

Goods and services on the rise

Prices for goods one step shy of the retail level shot up 0.8% last month, the largest increase since a surge of 1.2% in May 2015. Over three-quarters of June's increase was due to energy cost, which surged 4.1%. Within that category, gasoline was up 9.9%.

Prices for meats, jet fuel, electric power, home heating oil, and cigarettes also moved higher, while the cost of chicken eggs plunged 29.9%. Prices for carbon steel scrap and residential natural gas also fell.

The cost of services rose 0.4% in June, in large part due to a 7.7% hike in prices for services related to securities brokerage and dealing. Also on the rise were prices for automotive fuels and lubricants retailing; machinery, equipment, parts, and supplies wholesaling; traveler accommodation services; airline passenger services; and health, beauty, and optical goods retailing.

In contrast, the cost of apparel, footwear, and accessories retailing, long-distance motor carrying and residential real estate loans (partial) fell.

Prices excluding the volatile foods, energy, and trade services categories rose 0.3% after a dip of 0.1% in May. For the 12 months ended in June, this “core rate” is up 0.9%.

The complete report is available on the BLS website.

Jobless claims

It was steady as she goes for initial jobless claims last week, with the Department of Labor (DOL) reporting that first-time applications for state jobless benefits were unchanged in the week ending July 9, at a seasonally adjusted annual rate of 254,000.

That makes 71 consecutive weeks of initial claims below 300,000 -- the longest streak since 1973.

The four-week moving average dropped 5,570 from a week earlier to 259,000. This measure is consider a better gauge of the labor market as it lacks the volatility of the weekly headcount.

The full report may be found on the DOL website.  

In the same week the U.S. Labor Department released its May Consumer Price Index (CPI), showing a slight rise in prices, Adobe issued its Digital Price Index (DPI) showing prices are continuing to fall.

Can both be right? They can, because it appears that in this economy there are always some things that cost people more, while some things cost less. Depending on what it is you are buying, you could encounter inflation or deflation.

Adobe's DPI tracks billions of actual online transactions to gather its data. The government's CPI is based on consumer surveys that are designed to approximate sales in each product category.

Adobe says its DPI reveals deflation – prices that are going down, not up – in most of the tracked consumer goods. In May, Adobe found prices for appliances, computers, flights, furniture, sporting goods, TVs, and toys went down in price by as little as 2.8% or as much as 19.7%.

The government's official statistics, the CPI, reported year-over-year deflation between 0.3% and 16.1% for these categories. It also found airfares went up 0.4%.

Tablet prices are falling

Consumer electronics prices went down 1.4%, led by a 3.7% price decline for tablets. Sporting goods prices fell by 0.4%. But it you travel a lot, you likely encountered higher prices. Air travel cost 4.1% more in May than in April and hotel rooms cost 0.7% more.

Adobe looks at other digital data to draw conclusions on other aspects of the economy, and its picture is somewhat different than the one drawn by the government.

For example, the DPI suggests more people are looking for jobs. It draws that conclusion from counting visits to employment search sites. The latest analysis shows an increase from April to May in those job site visits and points to potentially higher unemployment rates than reported.

Housing weakness

It also measures the housing market. By tracking two billion visits to real estate marketplace sites in the last year, the DPI found that online searches for housing purchases and rentals have slowed.

The DPI also tracks price movements within categories, breaking it down between high priced items and low priced items. In May, Adobe said most consumer categories saw the biggest price declines among lower priced models.

“This tremendous amount of data reveals further deflation, higher unemployment, and more weakness in the housing market than current reports suggest,” said Adobe VP Mickey Mericle.

That's not necessarily good news. While consumers like low prices, economists worry that deflation shows a lack of demand in the economy, which can signal the onset of a recession.

What are we to take away from the Federal Reserve's unsurprising decision this week not to raise interest rates?

That seven years of easy money at historically low interest rates has done little to spur economic growth.

Interest rate hikes are usually initiated to slow inflation, but inflation has barely moved for years. Falling prices have been a greater fear.

So why did the Fed raise its key interest rate a quarter point back in December and suggest that there could be several more increases this year? That now appears to have been based largely on hope. Policymakers dearly want to “normalize” rates so they will be able to lower them again in case of a financial crisis.

The very real problem, however, is that raising rates amid economic weakness threatens to make the economy even weaker. In its statement, the Fed said it sees signs of strength as well as things that give it pause.

Pluses and minuses

On the plus side, household spending has increased slightly; the housing sector has improved, and exports have made gains. On the minus side, improvement in the job market has slowed; inflation is less than 2%, and low energy prices, while helpful to consumers, have created severe recessionary conditions in parts of the U.S.

“Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2%, the Fed statement said. “The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2% inflation.”

Brexit worries

Though the statement didn't mention it, Britain's vote next week on whether to leave the European Union – the so-called Brexit vote – was likely another big concern. Should Britain vote to leave, as current polls suggest it will, it could lead to economic uncertainty in Europe and possibly a recession.

The Fed left the door open to rate hikes later this year, but made clear it needs to see more evidence of economic strength – notably, improvement in the job market and inflation of at least 2%.

The cost of living one step shy of the retail level rose in May for the second straight month.

The Department of Labor (DOL) reports the Producer Price Index (PPI) for final demand jumped 0.4% last month on top of April's increase of 0.2%. For the 12 months ended in May, the PPI is down 0.1%.

Over 60% of the May advance is due to an increase of 0.7% in prices for final demand goods. The cost of final demand services inched up 0.2%.

The cost of goods and services

A large chunk of the increase in good prices came from the cost of energy, which surged 2.8%, thanks to a 6.6% jump in the cost of gasoline. Prices for diesel fuel, iron and steel scrap, fresh and dry vegetables, jet fuel, and oilseeds were higher as well. The cost of beef and veal fell 5.2%, and prices for electric power and for carpets and rugs also decreased.

The rise in prices for services was due largely to the 3.6% rise in the cost for machinery and equipment wholesaling. Apparel, jewelry, footwear, and accessories retailing; inpatient care; residential property brokerage fees and commissions; flooring and floor coverings retailing; and legal services costs also increased. Prices for loan services (partial) declined 3.0%, and the costs for food retailing and airline passenger services also moved lower.

Core inflation

Prices for final demand less foods, energy, and trade services – the “core rate” of inflation -- dipped 0.1% in May, but it is up 0.8% for the 12 months last month.

The complete report is available on the DOL website.

Over the last couple of weeks, a number of Federal Reserve insiders, in speeches and other policy statements, have suggested the time is right for another hike in the Fed's key interest rate.

After all, the Fed signaled a policy of rising rates back in December, but has only hiked the Overnight Discount Rate once – in December. Surely June is the time for another rate hike.

Don't count on it, says Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business. Dhawan says the Fed may wait nearly an entire year, until March 2017, before hiking rates.

“The Federal Open Market Committee (FOMC) dot charts are of interest to the press for their noise potential,” Dhawan wrote in his quarterly “Forecast of the Nation,” released May 26. “These are submitted weeks in advance of the meeting and as such are purely opinions and not policy projections, resulting in confusion.”

Dhawan says there is plenty of evidence to suggest the Fed will wait. He singles out comments in the April FOMC minutes that contradict the idea of a June rate hike.

Momentum indicator is down

“The FOMC said consumer sentiment was high, which is true, but it has been moderating since last fall,” Dhawan said. Combined with extreme volatility in the stock market and the political uncertainty surrounding the presidential primaries and upcoming elections, “the momentum indicator for confidence is not up, but down.”

In the past, the FOMC moved to hike rates when economic indicators suggested the economy was heating up. The purpose of the rate hike was to tap on the brakes. Dhawan argues that improvements in the economy are about half the size of those before the Great Recession.

The fact that auto sales continue at a record pace is not a good indicator, Dhawan said. Spending on cars diverts money from other things.

“This is bad news for shopping malls and retail centers because consumers are scrimping on discretionary spending to service their auto loans in the face of less than stellar income gains,” he said.

Subpar recovery

The fact is, he says, it is a subpar recovery. Since the Fed normally hikes rates to show things down a bit, Dhawan says there is absolutely no reason the Fed should want to slow economic activity now.

So why would a rate hike even be on the table? Many a pundit has suggested the Fed is desperate to raise rates, only so it would be able to lower them in the future when the economy goes over a cliff, as it did in late 2008.

All of this makes Friday's May employment report from the Labor Department more important than usual. Strong job growth would suggest improving economic conditions that might give Fed policymakers an added incentive to hike rates later this month.

But increasingly Dhawan's view seems to be the prevailing one. A June rate increase – or anytime this summer – is by no means certain.

Since the beginning of the year, the financial community has been in a funk. One bank, analyst, economist, and major Wall Street player after another has worried out loud about a recession.

These worries are being expressed as the stock market has churned along near recent highs, employment has been rising, and workers' wages have begun to increase.

One of the latest to warn of a coming recession is hedge fund manager John H. Burbank III, of Passport Capital.

Yahoo Finance quotes Burbank in an investment letter as saying he believes that within the next year the world will experience a major Chinese currency devaluation and a U.S. recession.

U.S. election is a wild card

“It is for certain in seven months we will see a U.S. election whose outcome may provoke or have discounted one or both,” Burbank wrote. “China will enter their liquidity crisis with likely the largest amount of non-performing debt in the world; the U.S. will enter its recession with the smallest rate reduction potential in history. For both it will be a normal ending after decades of extending their booms with the first quarter’s flip-flops possibly being their final policy moves."

Investment bankers have also been wearing grim expressions lately. JP Morgan is predicting even lower bond rates on the belief that the economy is running out of gas. The New York Post reports that 2016 has so far been one of the most pessimistic on Wall Street since the 2008 financial crisis.

“We’ve had crises in the past. What’s different about this is there’s not a crisis and we still feel pessimistic,” Paul Mortimer-Lee, chief economist at BNP Paribas, told The Post. “If something nasty comes around the corner, we’re in trouble.”

Disappearing shoppers

Then there are the nation's retailers, who have turned in disappointing earnings over the last couple of weeks. Both Kohl's and Macy's reported a drop in same store sales as consumers disappeared from sight.

If consumers are earning more and have a better chance of being employed, why aren't they spending? While some see that as a sign the economy is slowing, others see it as a sign the economy is shifting. Amazon.com, it turns out, is doing quite well. So are Home Depot and Lowes.

Where, then, is all the recession worry coming from? Perhaps it is coming from those segments that are losing business in the new environment. After all, when your sales go down and your costs go up, it's a recession for you.

The question, of course, is will it become a recession for everyone else? A growing number of people think so.

A big jump in the cost of gasoline helped send the cost of living up in April at the fastest clip in three years.

The Department of Labor (DOL) reports its Consumer Price Index (CPI) increased a seasonally adjusted 0.4% last month and is up 1.1% over the last 12 months.

Energy and food costs on the rise

An 8.1% increase in the cost of gasoline helped push overall energy prices up 3.4% last month. Also on the rise were the cost of fuel oil (+1.9) and natural gas (+0.6). Electricity prices dipped 0.3%. Despite the big April increase, energy costs are down 8.9% over the past year, led by gasoline which has plunged 13.8%.

Food prices inched up 0.2% last month with the food at home category, a reflection of grocery store prices, advancing just 0.1%. The cost of dairy and related products rose 0.4%, while cereals & bakery products and nonalcoholic beverages both increased 0.3%. The largest of the increases came in the “other food at home” group, which jumped 0.5 percent. Fruits and vegetables were lower (-0.5%), as were meats, poultry, fish, and eggs (-0.1%). In the past 12 months, food prices are up 0.9%.

Core inflation

The core rate of inflation, which excludes the volatile energy and food categories, rose 0.2% in April, with prices for shelter, medical care, motor vehicle insurance, airline fares, recreation, and education up 0.3%. Costs for household furnishings and operations, apparel, new vehicles, used cars and trucks, and communication were lower. Over the last 12 months, the core rate is up 1.1%.

The complete April CPI report is available on the DOL website.

What a difference three months makes.

In December, the Federal Reserve announced a modest quarter-point increase in the Federal Funds interest rate and strongly suggested as many as four additional rate hikes could come in 2016.

The Fed had held rates at near 0% since late 2008, and with employment rising the Fed policymakers said it was time to get rates back to normal.

But in a speech Tuesday to the Economic Club of New York, Fed Chair Janet Yellen backed away from that aggressive move, saying the U.S. economy, while resilient, remains weak and there is no immediate threat of inflation.

Mixed reading on the economy

“Readings on the U.S. economy since the turn of the year have been somewhat mixed,” Yellen said in her speech. “On the one hand, many indicators have been quite favorable. The labor market has added an average of almost 230,000 jobs a month over the past three months.”

But on the other hand, she noted, manufacturing and net exports have continued to be hard hit by slow global growth and the significant appreciation of the dollar since 2014. These same global developments have also weighed on business investment by limiting firms' expected sales, she said.

Translation: the economy is barely growing, and raising interest rates – normally something the Fed does only when inflation begins to emerge as a threat – doesn't make sense. It especially doesn't make sense when the rest of the world is lowering rates.

The rates that matter

As several pundits have pointed out in the wake of the speech, the Federal Funds rate is the only interest rate the Fed really controls. The bond market sets the rates that really matter, and since December's Fed hike, bond rates have all been going lower – suggesting the market's belief that the economy is slowing, not heating up.

Bond rates tend to affect consumers most – from long-term rates on mortgages to shorter term rates on auto loans.

For investors, the Fed action is much more significant. The stock market loves low interest rates, which make it cheaper for companies to buy back their stock, pushing stock prices higher.

With rates staying where they are, current stock valuations may hold up a while longer. The Fed not raising rates can also be expected to boost the price of gold, which has rallied off its lows in recent weeks.

And if the dollar continues to soften because rate hikes have been taken off the table, it will probably lift the price of oil, and in turn make it more expensive for consumers to fill-up at the pump.

Monday's revised first quarter Gross Domestic Income (GDI) estimate shocked a lot of economists. It probably shouldn't have.

Wall Street traders have been sharply divided since the start of the year, with some saying the U.S. economy is doing just fine and others warning that the economy is headed for recession – and the market for steep losses.

The GDI estimate revision, to just 0.9%, promises to escalate the debate in the next couple of weeks. Analysts downgraded expectations in the face of evidence that consumers aren't spending that much.

The U.S. may be doing better than the rest of the world, but the fact is, economies everywhere appear to be slowing down. That might not seem like a terrible thing – we haven't had a recession since that really bad one, from 2007 to 2009 – except that a lack of growth right now threatens a lot of things.

Fed policy

For one thing, the Federal Reserve is trying to pursue a policy of gradually raising interest rates. It hiked rates in December for the first time in six years, telegraphing that more hikes are coming. The last thing it wants to do is raise rates heading into a recession.

Fed Chair Janet Yellen may provide some clues about the central bank's plans when she speaks to the Economic Club of New York later today.

The U.S. stock market's valuation is based on growth. People buy stock in companies with the assumption that profits will increase and the value of the company will also go higher. If that assumption is wrong, investors won't continue to buy stocks unless their price goes down.

This is a problem for millions of Baby Boomers and other retirees who have the bulk of their retirement savings in stocks. If the value of those stocks goes down, these retirees will lose a lot of money – at least on paper.

It is worth noting that retirees who did not panic and sell when the stock market suffered steep declines in the wake of the financial crisis did just fine. The market quickly regained all the ground it lost.

But if the economy isn't growing, or threatens to slide into reverse, that threatens to reduce the value of retirees' assets, so they'll spend less. Baby Boomers, who drove the consumer economy for 40 years, are buying fewer “things” anyway, since many are trying to downsize.

Millennials, who are coming along behind them, have a value system that largely frowns on conspicuous consumption. They're even content to share things, like cars and houses, and save their money. At some point that has to have an effect on the economy.

Technological changes

So what may be at work here is a generational and cultural shift that is having profound – but thus far unrecognized – impact on the economy.

Technology is also having a disruptive effect on the economy. Stores in small towns now have to compete with Amazon.com. Etsy has allowed artisans to market their product to a global audience.

The technology effect is about to get even more pronounced. Author John Hornick says 3D printers will make a company's former customers their competitors.

“Presently, the products that can be self-manufactured are limited, but it won't always be that way,” Hornick said in an email to ConsumerAffairs. “Given enough time, anyone will be able to make almost anything, away from control.”

He says that means retail outlets that once sold mass-produced products will vanish, just like camera stores vanished when photography went digital.

The disruption to the old economy will increase, as people figure out easier and cheaper ways to do things and companies just won't be able to keep up. In fact, it may just be getting started.

The cost of living on the wholesale level ticked lower last month.

Figures released by the Bureau of Labor Statistics (BLS), show the Producer Price Index (PPI) for final demand, which measures the cost of things one step short of the consumer level, fell a seasonally adjusted 0.2% in February.

The PPI was up 0.1% in January and down 0.2% in December. For the last 12 months, the index is unchanged.

Goods and services

The cost of goods dipped 0.6% -- the third decline in a row. Most of that was the sharp 3.4% plunge in the price of energy. Food costs were down 0.3%. Excluding those two volatile categories, goods prices inched ahead 0.1%.

Services prices were unchanged in February after rising for three consecutive months. A rise of 0.3% for services excluding trade, transportation, and warehousing offset a 0.4% drop for trade services and a 0.7% decline in prices for final demand transportation and warehousing services.

The government's report on consumer inflation for February is scheduled for release tomorrow.

The complete report may be found on the BLS website.