See How Much Inflation Is Costing You

Rising prices are touching nearly every sector of the economy as the U.S. continues to face rising inflation, but the negative effects of this moderately high inflationary environment on consumers are uneven.

Those who rent and who spend large percentages of their income on food and energy costs are likely already feeling their budgets tighten as salary increases lag behind the rate of inflation. Rising costs can be obvious, whether at the pump or the grocery store, or can take the form of shadow inflation, in which the quantity or quality of goods decline even as prices remain relatively stable.

In addition to low-income households, individuals who do not own stock – about 44% of Americans – are at particular risk.

“In a moderately inflationary environment, it’s even more important to get your money working for you in the stock market,” says Alice Finn, founder of PowerHouse Assets and author of “Smart Women Love Money.” “If you put your money in a bank account right now, you are by definition losing money. Even with bonds, they are risky right now.”

Use this inflation calculator to see how prices are changing:

This calculator relies on the consumer price index, which measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The rate of inflation as of September, according to the CPI, is 5.4% over last year – but the CPI isn’t the only way to measure inflation.

The Personal Consumption Expenditures price index, or PCE price index, measures the change in prices for all consumption items, not just those paid out-of-pocket by consumers, and can better account for substitutions between similar items when one of them becomes more expensive. According to the PCE, the rate of inflation is 4.4% over last year.

“How we experience inflation is much more personal, depending on our needs and spending,” says David Weliver, founder of Money Under 30. “Looking ahead to 2022, I expect some continued steps to curb bond buying and preparations to raise interest rates by central banks to combat the rising inflation. I would expect inflation to stabilize a bit but not necessarily retreat anytime soon – at least until the supply chain unclogs a bit.”

In the last 12 months, the average price of food rose 4.6%, according to the CPI. Certain food items have increased in price more than others, and in particular, the cost of beef has risen most significantly: The average price of beef was $4.79 per pound in September, up from $4.17 per pound a year prior in 2020.

“Looking at the September numbers that came out, the biggest impact was food and energy,” says Iwona Cholewa, chief investment officer of PowerHouse Assets. “Economists like to exclude those numbers from the core inflation number, but those are really important pieces of consumers’ budgets.”

Rent in the U.S. cost about $1,824 in September, according to the Zillow Observed Rent Index, which calculates the mean of listed rents that fall into the 40th to 60th percentile range for all homes and apartments in a given region.

This is up from $1,671 in the U.S. in September 2020 – but certain areas of the U.S. have seen more acute spikes in rent prices. In the Miami-Fort Lauderdale region, the mean rent increased from $1,998 to $2,323 from September 2021 to September 2022.

While renters are particularly vulnerable to inflation, Gary Zimmerman, managing partner of Six Trees Capital in New York and founder of MaxMyInterest.com, says, “By contrast, those who own homes will likely see the nominal value of their home increase at the pace of inflation, and people who hold investments like stocks benefit from a low interest rate environment, which makes future cash flows worth even more in today’s dollars, pushing company valuations up.”

Since September 2020, the average price of gas rose 42.1%, with the price of gas up to $3.27 per gallon as of September, according to the CPI.

Whether gas, food or housing, rising prices may be attributed to a mismatch in demand and supply.

“It’s quite possible that the inflationary environment that we’re experiencing today is caused by supply shocks, not weakness in demand,” Zimmerman says. “Understanding this dynamic is important, since if prices are rising due to scant supply (due to worker shortages, backups at ports, etc.), monetary policy won’t fix the problem, but rather, it could exacerbate it.”