The 7.5% U.S inflation—the highest in 40 years—is costing the average consumer $276 a month, or $3,312 a year, according to Moody's Analytics
, with the two biggest costs being energy and food.
The Labor Department announced Feb. 10 that inflation rose 0.6% in January from the previous month. Economists had expected inflation to come in at 7.2% year over year, and, as a result, on Thursday as the data was released, the Nasdaq tanked 2.10%, the S&P lost 1.81% and the Dow gave up 1.47%.
“A lot of people are hurting because of high inflation; $276 a month—that’s a big burden
,” Ryan Sweet, a senior economist at Moody’s Analytics, told The Wall Street Journal. “It really hammers home the point of: ‘What is the cost of inflation?’”
Sweet arrived at his $276 monthly average by comparing household spending under a 7.5% inflation rate to the average 2.1% inflation in 2018 and 2019.
Who Inflation Hammers the Most
Lower-income households, which are the most likely to rent rather than own a home, are hardest-hit by the surging inflation, which major consumer goods companies, such as P&G, plan to continue to pass onto shoppers in multiple price hikes throughout 2022
A Wells Fargo study
into how inflation is impacting nine different demographic groups found that Millennials 35-44 experienced 6.9% inflation in 2021—more than any other age group; people in this age range tend to spend more on cars and gas. Indeed, the cost of leasing a car rose 8% in 2021 to an average of $418 a month, and delinqueny car payments among those 30 and younger rose last year.
People 65 and older were hit with 5.8% inflation, in large part due to a larger portion of their money, 16%, going to health care.
Inflation for Hispanic or Latino households was 7.1% in 2021, also due to a greater amount of their money spent on cars, primarily used autos, and gas.
For Asian families, whose income is higher than the average American household, inflation was just 5.6% last year.
Sticker Shock at the Gas Pump
The first, and perhaps most impactful, price increases that Americans began seeing over the summer were for gas and fuel. According to the Pew Research Center, citing U.S. government data, gas has risen 58.7% to $3.49 a gallon
, up from $2.20 in November 2021.
Why does this matter? The average driver uses 570 gallons of gas in a year, spending roughly $2,000.
Inflation bumps up that cost to $3,200. Especially if we're hit with a harsh winter, heating a home can also increase fuel costs by hundreds, if not thousands, of dollars.
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