2022 will be more expensive for consumers
SPRINGFIELD, Mo. (KY3) - No one knows exactly what 2022 has in store for us but most experts agree that the year will bring higher costs in most aspects of our lives.
Not that you haven’t noticed that already.
From the gas pump to the grocery store experts say the typical American is now spending a couple of hundred dollars more a month than they were a year ago.
Last month’s seven percent increase in consumer prices was the highest jump in almost 40 years.
According to the U.S. Department of Labor in comparing consumer prices from November 2020 to November of 2021, gas prices made the biggest jump (58 percent) followed by used cars (31.4 percent), hotels (25.5 percent), and meat, poultry, and fish (13.1 percent).
CNBC put together a list of 10 things that will be more expensive in 2022 that include housing, food, clothing, heating costs, gas, dining out, cars, computers and electronics, furniture, and medical care.
In other words, many of the things we use in our daily lives.
Obviously, some of the blame rests with the COVID-19 pandemic, supply chain problems, and businesses having to pay more to lure and keep employees.
But Springfield financial advisor Shawn Gallagher of Piatchek and Associates added another source that many people may not be aware of.
“The Federal Reserve shoots for two percent annual inflation,” he pointed out. “So they like to see just a little bit of inflation every year. In the last decade, inflation has been below that almost every year. So part of what’s going on now is a little bit of catch-up. The supply chain problem also comes into play and each item there has its own issue.”
For instance, higher food costs are due to many factors such as supply chain hiccups, labor shortages, higher shipping costs, and farmers paying higher costs for items such as fertilizer and being unable to find the supplies and equipment they need to get their product to market.
When it comes to the bigger purchase items like cars and houses?
“There’s a big demand for housing right now and not a lot of supply, hence prices are going up,” Gallagher explained. “Cars are the same way. The shortage of things like chips that are manufactured overseas has driven their prices up. So we have been coaching people that if they don’t have to make that major purchase right now, just wait and we’ll reassess in 90 days or we’ll reassess in six months.”
And that’s because hopefully some of the problems like supply chain difficulties will improve.
“But it won’t be in a week or two,” Gallagher cautions. “It will take months. I would think maybe around the middle of the year those types of things will get figured out. Companies will find a way to avoid all that.”
So Gallagher’s advice on how you should approach all these price increases with your finances?
“The first thing we tell everybody to do, and it’s the hardest thing anybody can possibly do, is just sit down and make a realistic budget,” he said. “Most people will find one or two things that they don’t need. We always use the example of subscriptions to streaming services or some kind of e-mail service. Cable TV prices have gone way up. Maybe you need to dial that back a little. It might be time to take a pause on certain entertainment things. You may have to delay a vacation. This may not be the best time to do a European cruise for instance. Maybe this year just rent a lake house. There are ways to adjust but the only way you can really do that is to identify how you spend your money and know your own budget.”
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