People shop at a grocery store in New York City on June 10, 2022.
Spencer Pratt | Getty Images
Moody’s Analytics analysis shows that the average American household spends $433 more a month on the same goods and services as they did a year ago. Inflation data for October.
while slightly down from $445/month Stubbornly high inflation weighs on typical budgets in September.
“Despite lower-than-expected inflation in October, households are still feeling pressure from rising consumer prices,” said Bernard Yaros, an economist at Moody’s.
consumer price 7.7% increase in October For a year, according to the U.S. Bureau of Labor Statistics.that rate is 9.1% in June, marking a recent peak, and data suggest inflation could fall further in the coming months.However, the October rate is Nearly the highest level since the early 1980s.
Wages for many workers have not kept up with inflation. So they are losing purchasing power. Hourly wages fell by an average of 2.8% in the year to October, after taking inflation into account. according to to BLS.
“There are more signs that the peak of inflation has likely passed. It’s supposed to offer some relief to those whose balance has been compromised…a bachelor’s degree,” Yaros said.
Moody’s estimate of the impact of inflation on the dollar analyzes annual inflation and typical household spending in October. personal consumption survey.
Financial advisers say households can take certain steps to soften the impact.
“There is no silver bullet,” says a certified financial planner, Accredited Financial Group, he told CNBC. The company, based in Altamonte Springs, Florida, ranked him 95th in the rankings. 2022 CNBC Financial Advisor 100 List.
“It’s all these little decisions that add up at the end of the month,” Bart said.
First, it’s important to separate fixed and free costs, said Madeline Maroon, a financial adviser in San Ramon, California. California Financial Advisorsranked number 27 on CNBC’s FA 100 list.
Fixed costs are expenses for necessities such as mortgages, rent, food, transportation, and insurance. Discretionary expenses include spending on things people enjoy but don’t necessarily need, such as eating out and vacations.
Flexibility to reduce fixed costs is often less. That means it’s not the essentials that households are likely to have to cut if they want to save money.
Households may need to ask questions such as: Do you need that new car? Can you buy a used or cheaper model instead? Or is it something that can be put on hold and re-evaluated at another time?
Americans can also consider alternatives. For example, travel closer to home or stay in cheaper accommodation rather than farther away and more expensive vacation destinations. Alternatively, get a haircut every 8-10 weeks instead of every 6 weeks.
It can also reassess monthly subscriptions such as clothing and streaming services, which can often result in a “money drain,” Maloon said. Some are barely used, but they continue to suck money out of my account every month.
“Continuing the same lifestyle will pay you more,” Bart said.
In general, every purchase decision has options, and those looking to save money can look for the cheapest option possible, Bart said.
There are also several ways households can save money with fixed cost buckets.Compared to grocery shopping, consumers Stock up on staples, shop with food lists, compare stores to find the best deals, and switch what you’re eatingfor example.
For example, consumers who spend a lot of money on gasoline when commuting Potentially reduce transportation budgets Use our price tracking service, pay with cash, be more strategic with your schedule, and sign up for our loyalty program.
Bart said it’s important for people to avoid funding higher costs through credit card or retirement plan withdrawals or loans.
“That’s the worst thing you can do,” he added.
https://www.cnbc.com/2022/11/25/inflation-boosts-average-household-spending-by-433-a-month-moodys.html Inflation will push average household spending up to $433 a month: Moody’s