Inflation rose last month at its highest rate in nearly four decades, with rising costs weighing on most areas of household balance sheets.

Inflation measures change the price consumers pay for goods and services.

It rose 6.8% year-on-year through November 2021, the highest annual high since 1982, the Ministry of Labor said on Friday. A consumer who paid $ 100 for an item last year would pay $ 106.80 for the same item today.

This reading of US inflation includes the prices of all kinds of goods such as alcohol, fruit, airline tickets, firewood, hospital services, and musical instruments.

At the start of the Covid pandemic, several areas such as reusable cars and trucks were targeted for higher inflation – a financial burden that many families could face. (Not all families need to buy a car.) Now, the cost of a wider range of goods and services that are harder to avoid seems to be increasing.

“As for basic household expenses, you haven’t seen them there [earlier this year]. Now you are, ”said Greg McBride, senior financial analyst at Bankrate, on inflation.

“We don’t see any price cuts to make up for this,” he said. “Price increases are pretty common.”

Housing, transportation, and food are the top three cost categories for the average American household each year, according to the Survey of Consumer Spending.

In 2020, housing costs (such as rent and utilities) were around 35% of the average human budget. Transportation costs (such as buying vehicles and gasoline) made up 16% of the budget, and subsistence costs (food and restaurants) were another 12%.

In all three categories, many cost items rose faster than they had for many years.

For example, the “Eat at home” index (vs. double-digit eggs and beef.

Gasoline prices also rose 58.1%, the largest increase in the 12 months since April 1980. Household energy costs rose 12.2%. Motor insurance grew by 5.7%.

Of course, some of these categories, like food and energy, are volatile; are subject to significant downward or downward price fluctuations. And not all consumers will be equally affected. (For example, a person who accepts public transport will not be paying excessive prices for gasoline.)

While categories like accommodation are more modest (e.g. rents have increased 3% in a year), some economists fear these prices will prove to be more stubborn than other categories.

A landlord who increases the rent by 3% (to $ 1,030 versus $ 1,000, for example) is unlikely to lower that rent for future renters. With that in mind, the impact of inflation on the rental budget might be “stickier”.

“That puts a strain on the family budget,” McBride said of inflation. “Your salary can only be increased once a year. But you have higher costs for one or the other month after month. “

Persistent inflation?

However, it is not clear whether inflation will persist or rise at the same pace.

Some financial experts believe that prices will fall if pandemic distortions (e.g.

President Joe Biden and White House officials tried Thursday to reassure Americans that the cost of energy and the like was beginning to decline, a dynamic that would not have been evident from Friday’s inflation readings.

“These data are retrospective and so do not reflect some of the most recent price movements, particularly in the energy sector,” said Brian Deese, chief economic advisor to the president. He cited a nationwide drop in gasoline prices of nine percent.

Headline inflation numbers may appear high compared to the previous year due to so-called “base effects” (i.e. prices for November 2021 are compared with prices for 2020 when pandemic effects were prevalent at the time).

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