Inflation is well off its peak of 9.1%, sitting below 4%. So why doesn’t it feel like we are getting price relief? We crunched the numbers and found out how much prices have really spiked over the past three years in this week’s Five For Friday.
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#5: Shelter
Shelter is the most basic necessity and the price of a place to live is up 18% since Sept. 2020, according to the Bureau of Labor Statistics. Median asking rent has gone from under $1,700 per month pre-pandemic to more than $2,000 per month, Redfin reported.
Purchasing a home isn’t going to save you any money either since the average price of a new home jumped from roughly $400,000 in 2020 to $513,000 today. And that doesn’t even account for mortgage rates over 7%. There’s a Five For Friday about why this isn’t the year to make a home purchase.
#4: Groceries
Stocking your refrigerator is also making your wallet lighter. Groceries cost 21% more than they did three years ago, but rising prices have slowed over the past year. The price of a dozen eggs spiked from $1.35 to $2.07 over that 3-year period, but it’s a far cry from the $5 spike in January. Meanwhile, milk has gone up $0.52 per gallon to $3.97 and a pound of chicken increased from $1.54 to $1.90. It may seem like a few cents here or there, but for a cart full of groceries it adds up at the register.
#3: Restaurants
If you are thinking of taking a night off and having someone else do the cooking, you’re going to have to pay. The cost of eating at restaurants has gone up 20% over the last three years and unlike groceries, this food inflation is still heating up.
When eateries reopened after COVID-19-induced lockdowns, many employees didn’t return. Some just moved on to better positions. The demand for restaurant workers pushed wages up 20% between 2020 and 2022. There are still so many openings, some establishments have taken the leap and turned to robots.
#2: Cars
It’s no secret that buying a car over the last few years has been crazy. As a whole, new cars are selling for 22% more than they were three years ago. The average cost of a new car is more than $48,000, which is $10,000 more than it was in Sept. 2020, according to Kelley Blue Book. Meanwhile, the price of used vehicles is up 22% with the average sale price at $27,000, according to Consumer Reports. If you aren’t paying cash, you can expect the average interest rate on a used car loan to be more than 11%.
#1: Energy
The energy index is up 49% since Sept. 2020. The majority of the pain is felt by Americans filling up their gas tanks. The price at the pump is up 73% from pandemic lows three years ago. Demand ended up coming back while production took some time to ramp up and left us with higher gas prices. Gas prices eclipsed $5 per gallon in the summer of ’22 at the top of the spectrum. As the saying goes, “The cure for high prices is high prices.” And domestic oil production is expected to hit record levels by year’s end.
Simone Del Rosario:
Inflation has come way down from its 9.1% peak, so why don’t we feel any better about prices? We did the math and here’s how much prices have really gone up over the past 3 years in this week’s Five For Friday.
The price of a place to lay your head is up 18 percent since September 2020, according to CPI’s shelter index. Redfin says the median asking rent is over $2,000 a month. It was under $1,700 before the inflation train left the station. And forget about breaking out of the renting class to buy. The average sales price of a new home jumped from around $400 grand three years ago to $513k today.
Filling up the fridge in your home is just as bad. Groceries cost 21% more than three years ago, but food inflation has luckily slowed down a lot this year. Eggs have gone from an average $1.35 a dozen to $2.07 now, but who can forget that near $5 spike in January? Milk is up 52 cents to $3.97 a gallon, and a pound of chicken went from $1.54 to $1.90. It may seem small but those cents add up at the register.
Now the cost of eating out has gone up 20% over the last three years and that price inflation is still heating up. When restaurants reopened after COVID lockdowns, many employees didn’t come back. Some just flat out moved on. And the demand for restaurant workers pushed wages up 20% between 2020 and 2022. There are still a lot of openings, forcing some places to turn to robots. Let’s just hope they don’t go rogue.
If you’ve tried to buy a car in the last few years, you know prices are crazy. The CPI says new cars are selling for 22% more than 3 years ago. Kelley Blue Book says the average cost is more than $48,000, 10 grand more than in September 2020. Meanwhile, the price of used vehicles is up, uhh, 22%. The average used car now sells for $27,000, according to Consumer Reports. To make matters worse, the average loan on that used car has an interest rate of more than 11%.
Here’s the kicker, the energy index is up 49% since September 2020. A lot of that has to do with the price at the pump, which is up 73% from those pandemic lows three years ago. Demand roared back during the pandemic while production stalled a bit, and Bob’s your uncle. Higher gas prices, hitting $5 bucks a gallon over the summer of ‘22. But you know the cure for high prices is high prices! Domestic oil production is expected to hit a record in 2023.
So we’ve spent a lot the past three years. But a lot of things are off their absolute highs and some things that have even fallen the last 2 years, like electronics and rental cars. So buy a TV and feel better about yourself. That’s Five For Friday. I’m Simone Del Rosario and it’s Just Business.
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