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by Maurie Backman | Published on Oct. 14, 2021
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Inflation keeps rearing its ugly head. Here's what consumers need to know.
It's no secret that the cost of living has soared in recent months. These days, consumers are paying more at the pump, at the grocery store, and just about everywhere. And recent data confirms just how intense inflation has been.
The Consumer Price Index rose 0.4% for the month of September, reports the U.S. Labor Department. That's higher than the 0.3% increase analysts were expecting.
That may not seem like such a huge increase. But on a year-over-year basis, consumer prices are now up 5.4%. That's the highest increase since January of 1991.
In September, gasoline prices rose 1.2%, representing a year-over-year increase of 42.1%. Ouch. Food prices, meanwhile, also rose 1.2% for the month.
Now, the good news is that certain expenses did decline in September. Used car prices fell 0.7% and airfare dropped 6.4%. But while those decreases may help some consumers, they don't represent daily expenses. So it's clear that right now, a lot of people are being squeezed financially just to function.
Based on the levels of inflation we've seen over the past few months, there's a good chance higher costs will be with us for the rest of the year. A big reason why certain costs are up is that many supply chains were halted during the pandemic, and now, there's not enough product to meet ongoing demand. And whenever you have a situation where demand exceeds supply, prices have the potential to rise.
Once supply chains can catch up to demand, consumer prices should start to come down. But that may not happen until well into 2022. And that means we may be grappling with higher costs for food, fuel, and essentials for quite some time.
Consumers who live paycheck to paycheck without any money in savings risk landing in debt due to rampant inflation. If you're in that situation, try to set up a budget so you can see exactly where your money is going every month and find ways to cut back on spending if possible.
Now is also a good time for cash-conscious consumers to look at getting a side hustle. Some people already live quite frugally and may not have expenses in their budgets they can cut back on. For anyone in that boat, a second job could be the ticket to a quick boost to their bank accounts. And that could make it possible to better manage rising expenses and avoid debt. Plus, some side hustles can be very flexible, allowing them to work even for many people with really busy schedules.
The good news is that at some point, inflation is apt to calm down. But we're not there yet, so consumers should take steps to try to avoid landing in debt while living costs are high. The tricky thing about debt is that it can be hard to shake once it's accumulated. So if possible, avoiding that fate in the first place is ideal.
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