Optimism about the latest inflation data is everywhere: "US inflation fell in March for the ninth month in a row"; "Stocks are rising as inflation cools in March"; "Inflation data eases rate-hike worries." But what these Wall Street-focused articles fail to acknowledge is that inflation is still hammering people where it hurts most, their wallets, and it's especially bad for the working class and those on fixed incomes.
Inflation is now at 5% in the U.S., according to the latest Consumer Price Index numbers from the Labor Department. That's down from 6% in February, so it's trending the right direction. But it still means that on average, you're spending 5% more than you were on goods, services, travel, and shelter compared to one year ago. To put it in perspective, the Feds want inflation to come down to 2%, so we've still got a ways to go.
The Pain Points
What's going to make headlines is that the cost of food at home, a.k.a. groceries, fell slightly by 0.3% in March 2023, the first time it's fallen since November 2020. Prices were already so high, though, that it's barely making a dent in your grocery bill.
Eggs, for instance, have finally been coming down in price after the worst avian influenza outbreak in U.S. history made prices skyrocket to $6 a dozen or more. While the cost fell 10.9% between February and March, they still cost 36% more than they did a year ago. Sure, $3 a dozen is better than $6, but remember when they cost $1.50? That was only back in 2021.
For an average family of four, with a $500k mortgage (variable rate, 25-year amort.), for the next 12 months:
— The Food Professor (@FoodProfessor) April 12, 2023
👩🍳Food inflation is costing that family $1,065 more.
🏘️Mortgage payments are costing $13,320 more.
💵Expenses have gone up $14,385 over 12 months. https://t.co/AJTmBcCPsZ
Meats, including chicken and fish, both still cost more than they did a year ago, despite showing a small decrease in price from February to March 2023. Potatoes, the cheap cooking staple, fell 1% last month but are still 9.7% more expensive than a year ago. Coffee, butter, baby food, and frozen vegetables, among other groceries, all follow the same pattern of a slight dip but higher overall price.
Shelter, which includes rent, hotels and other lodging away from home, and household insurance, only rose 0.6% from February to March, the smallest increase since November. That's not much consolation to anyone that's seen their rent increase 8.8% over the last year, though. Experts predict that rents will come down this year, but as with anyone who's ever had a landlord before, we'll believe it when we see it.
What Inflation Means For You Now
Unfortunately, your wallet is probably not going to feel any fatter anytime soon. You're not going to notice much change in your grocery bills unless the only thing you buy is eggs. Getting a full cart of necessities will still run you $150 or more — unless you just happened to be at the right Trader Joe's at the right time.
If you've been hoping to buy a house and aren't completely priced out of the market in your area already, the new inflation data probably won't sway the Fed from increasing interest rates one more time during their next meeting in early May. That means mortgage rates will go up once again, making loan payments even more unaffordable for most people. Don't expect rates to fall until later in the year.
Most of the fun stuff you do, whether that's eating out, going to see movies, or traveling, is going to continue to cost more, too. Those service and entertainment industries were hard hit by the pandemic, and aren't likely to drop back down in price like groceries and utilities.
Despite the economy not hurtling towards disaster quite as fast as it had been, you're probably not going to notice much difference in your day-to-day life. Inflation is "still climbing but at a slower rate. Being on a fixed income, it’s incredibly difficult,” said one semi-retiree to USA Today who has cut down on eating out, travel, and tapped into retirement savings. "I pay more and have less."
