Is Inflation Impacting Your Spending Habits?
I am sure you have been to the grocery store lately (unless you shop for groceries online). We shop for groceries every other week, and my husband was the last person to go so I hadn’t been to a store for a month until last weekend; boy was I surprised! Our grocery bill has increased by about $20 every other week from just a few months ago. That is $40 for our two person household; how much has your grocery bill increased per month?
The Consumer Price Index (CPI) is one way that is used to measure inflation as it concerns American consumers. It measures changes in the pricing of a basket of goods and services over a period of time. The products and services are representative of what Americans consume, and the most recent ones have been chosen from the Consumer Expenditure Surveys for 2007 and 2008 (7,000 families recorded their quarterly consumption during these surveys). There are over 200 categories, including transportation, food and beverage, and recreation. The CPI is measured for two groups of consumers: Urban Consumers and Urban Wage Earners and Clerical Workers.
Increase in Prices
From March 2010 to March 2011, the ‘All Items’ category increased in cost. Food and gasoline spending accounted for three quarters of this increase, which is probably not a surprise to you.
In particular, gasoline prices have risen 27.5% from March 2010 to March 2011.
The category ‘Food At Home’ (aka the food you purchase at a grocery store) rose 3.6% in price from March 2010 to March 2011. Of that 3.6%, the highest price increases since February 2011 were:
- Vegetables: 4.7% (specifically tomatoes, lettuce, and potatoes)
- Coffee: 3.5%
- Margarine: 3.9%
- Salad dressing: 3.1%
Now may be the time to look into 11 Ways to Save Money on Groceries.
You can see data for the most recent month in the economic news release which is updated monthly.
How this Could Impact Future Policy
Beyond prices at the grocery store and the gas station, the Consumer Price Index is also used as an economic indicator in a number of ways, and a substantial increase to prices could impact future government policy. The CPI is used to determine:
- Cost of living adjustments (COLAs) for social security, federal, and military retirees; recipients have not seen an increase in benefits for the past two years (the last increase was 5.8% in 2008).
- Federal income tax brackets, personal standard deductions, and exemptions are all based off the CPI as well, and if prices continue to rise throughout 2011 these could change.
- The CPI is the reason for the increase in New I-Bond Rates at 4.6%.
In addition, IRS mileage rates are “based on an annual study of the fixed and variable costs of operating an automobile.” Since the CPI measures gasoline prices, it’s probable that the study will correlate with increases in the CPI as an indicator for the variable costs.
How have rising prices impacted your household? Which items seem to be more expensive to you?
A lot of people like going to one store or two for their grocery and food supplies.
For almost 30 years, since we started our household, it has always been ‘shop for best price’ and ‘buy in quantities’. This means that we regularly go to 7 stores for our stuff.
Cermak, Butera, Jewel/Dominicks, Caputo, Walmart/Meijer, Aldi, Menards and Asian stores.
Our background of being an ‘economizer’ has beat inflation for the most part by buying things in bulk when they are out there on sale.
As an example, we have 11 bags of rice that we purchased at a ridiculous half price when one of the stores was introducing a new product. After comparing the marketplace for rice, we figured that this was Basmati rice, 10 lb bag, which actually tastes better as it ages, and will never see these prices ever again in America. Now we are all set for 10 years, and have made room in our basement for all of our ‘smart shopping’.
A lot of our friends cannot handle this, or are amazed at this approach, but I come from a family who purchased their stuff in bulk and become wealthy by not ‘shopping on demand’ or ‘shopping on impulse’.
Not sure all of the readers of this note can do it, but if you want to beat inflation, have a good amount of savings, you can get some great returns on your money by buying Jalepeneos or Tomatoes and crushing them when they are on sale for 39c/lb and putting them in your freezer. When you need it, you just break off one of the tomato or jalepeno ice-cubes and use them.
Shop Smart, Use Smart, Stay Smart, and Beat Inflation.
As an end result of all of this, we have never had any debt, any issues of taking good vacations, and buying anything at anytime. Of course, all of this is only God willing.
Hope this perspective helps, and if you can, try to fit some of these into your shopping trips and you will NOT regret it.
Kenny
Interesting, isn’t it, that our government tells us that inflation is mild. Bill