Key Inflation Index Posts Greatest 12-Month Increase on Record
by Maurie Backman | Published on July 17, 2021
It's official: It now costs a lot more money just to function.
I stopped by the supermarket the other day for a handful of items. When I saw my total -- something in the ballpark of $23 -- I was flabbergasted.
But really, I shouldn't have been shocked. Inflation has been wreaking havoc on Americans' wallets for several months, as the cost of common goods and services has been going nowhere but up. And while costs didn't rise as much in June as they did in May, it's still gotten a heck of a lot more expensive to exist on this planet.
In June, the Producer Price Index (PPI), which measures the prices paid by businesses rather than consumers, rose 7.3% on an annual basis, up from the 6.6% rise recorded in May. That 7.3% increase is the largest one on record since the government began tracking annual data in 2010.
Now to give that 7.3% increase some context, in December, the one-year change in the PPI was 0.8%. And while the PPI doesn't directly measure consumer prices, it impacts them indirectly. That's because when businesses pay more for supplies, they tend to pass those increased costs on to consumers at the retail level. That could explain why a carton of milk, a box of strawberries, and three cereal boxes cost me $23 when I'd normally spend under $20.
What to do if life's costing too much
Spending an extra $5 here at the grocery store and another $3 there at the gas station can easily add up, especially if you're living paycheck to paycheck. Of course, you can't avoid eating or filling up your car just because prices are up. But one thing you can do is get yourself on a tight budget. Look through your expense categories, and if you're worried about inflation driving you into debt, identify some areas to cut back on.
It could also pay to get yourself a side job to combat your rising expenses. Picking up a few evening shifts at a local restaurant or driving a few nights a week for a ride-hailing service could put enough extra cash in your pocket to not only cover your living costs, but also allow you to sock away a little bit of money in a savings account so you have a modest cushion.
How long will this bout of inflation last?
It's hard to say when the cost of goods and services will start to come down, but one thing you should know is that a big reason we're in this situation now is that the U.S. economy is finally starting to recover from the events of the past year and change. As such, the demand for certain products is exceeding supply, and when that happens, prices are apt to rise.
A lot of supply chains were halted during the pandemic. But as they begin to pick up the pace and catch up to demand, the general cost of living should start to come down. But that may not happen for a number of months. So for now, gear up to pay extra for the various essentials you need to function. It's not an ideal situation, but preparing for it will help you avoid a scenario where you're this close to cursing out loud in the middle of a crowded supermarket like I almost did the other day.
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