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There may finally be some light at the end of the inflation tunnel.
Key Point
- The latest consumer price index showed inflation slowing and below expectations.
- Prices rose 7.7% year-on-year in October, an improvement over September’s 8.2% increase.
- Many households have had to increase their savings or take on debt to cover their daily purchases.
In 2022, Inflation has been hanging around like the worst unwanted party guest for a long time. It eats up your grocery budget, drives up utility bills, and generally makes life more expensive.
But today there is a glimmer of hope on the inflation front. The October consumer price index (CPI) rose 7.7% year-on-year. That may sound high, considering many everyday items are much more expensive than they were last year. But in September he is lower than the 8.2% increase. It is also below the 8% expected by some economists.
Could prices start dropping soon?
“This was the smallest increase in 12 months since the period to January 2022,” according to a press release from the Bureau of Labor Statistics, the organization behind the CPI. While this is certainly a step in the right direction, it is unlikely to have a significant impact on the cost of living just yet.
The index shows that housing costs remain high and food and gas costs continue to rise. Used car, medical and clothing costs are all down month-over-month. Unfortunately, if you’re hoping your Thanksgiving dinner will cost less, that’s unlikely.
A severe bird flu epidemic has had a major impact on turkey prices and availability. More than 49 million birds have been infected or killed so far this year, according to the US Centers for Disease Control and Prevention. The price of butter, another important holiday ingredient, is rising due to rising cattle feed costs and labor shortages in production plants.
The Federal Reserve has taken aggressive steps since the spring to put the brakes on the economy. It’s a delicate balance between slowing growth and keeping inflation under control, and hitting the brakes and possibly triggering a recession. This is one of the first indications that jumbo rate hikes may be having an impact. Not only could prices start to fall, but the Fed could ease rate hikes. Let’s see how it goes.
How to manage the higher cost of living
More than a third of Americans use savings to cover their daily expenses, according to a recent National Retail Federation survey. Additionally, 32% said they had to borrow money to pay their bills. Not surprising given that consumer price index data shows that food prices at home are 12% higher for him than she was a year ago.
Using savings or borrowing money to pay for groceries is understandable, but it’s not very sustainable. You’ve probably already made the switch to store brands and become an expert in finding the best deals. However, there may be other ways to reduce costs a little more.
- Start by reviewing your spending. If the word “budget” makes you uncomfortable, consider yourself in control of your finances. The only way to really cut costs is to know where your money goes and how it compares to your income. Try a budgeting app or check your recent bank statements.
- Reduce unnecessary expenses: Once you know where your money is going, see if there are areas you can cut back on. Perhaps a subscription service or little luxury you don’t actually use weighs more than you think. Temporary cuts can be made to reduce costs in the short term as the current situation will not last forever.
- Look for ways to earn more. The extent to which you can cut costs is limited, but you may be able to bring in additional cash, especially since the job market is still relatively strong. It also includes selling things you don’t really need.
Everyone is different and what fits one person’s lifestyle may not fit another. If you drive a lot, you may be able to save money on gas by combining errands or taking public transportation. It won’t save you money directly, but it’s worth maximizing your rewards with the right credit card. Combine with cashback app and get double rewards. When it comes to credit cards, now is not the right time to take on high-interest debt. If you can reduce your debt, all the better.
Conclusion
It is too early to tell if we can finally say goodbye to inflation. But the slowdown is still good news. The next few months will tell if it’s just a temporary shift in the charts or if it’s actually hit a corner. Let’s hope it’s the latter.
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