Inflation Cost Americans Additional 350$ Monthly

Due to the rapid rise in the cost of goods and services in America, rent and groceries to utilities, families are paying a lot more every month as they try to keep up with inflation.

And while inflation has cooled in recent months, the typical household spent over $350 or more on good and services in December than a year ago according to reports.

The good news is that the cost of living shock appears to be easing and paychecks are starting to catch up.

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At the inflation peak last June, the typical family spent an additional $502 per month compared with the year before.

Families are spending an estimated $82.60 more per month on shelter and $72.01 more on food, Moody’s said.

The Bureau of Labor Statistics said Thursday that Americans spent 11.8% more on groceries than a year ago. Egg prices have spiked by nearly 60% over the past year, the biggest annual increase since 1973, in part due to a supply crunch caused by avian flu.

Other items that are costing families more per month include utilities (up $47.33), health care ($17.97 higher), entertainment ($15.27) and alcoholic beverages ($2.67), according to Moody’s.

The bright spot is gasoline, where the typical family saved $1.55 per month compared with the year before.

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Some of the pain from inflation is being mitigated by a significant shift in recent months: Wages are finally growing at a faster pace than inflation.

And, at the same time, the pace of inflation has clearly slowed. Consumer prices increased by 6.5% year-over-year in December, the slowest pace since October 2021.

“Meaningful progress in the US economy’s fight against elevated inflation was made in the closing months of the year,” Matt Colyar, an economist at Moody’s Analytics, said in a report.

WASHINGTON Rising U.S. consumer prices moderated again last month, bolstering hopes that inflation’s grip on the economy will continue to ease this year and possibly require less drastic action by the Federal Reserve to control it.

Inflation declined to 6.5% in December compared with a year earlier, the government said. It was the sixth straight year-over-year slowdown, down from 7.1% in November. On a monthly basis, prices actually slipped 0.1% from November to December, the first such drop since May 2020.

The softer readings add to growing signs that the worst inflation bout in four decades is gradually waning. Still, the Fed doesn’t expect inflation to slow enough to get close to its 2% target until well into 2024.

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The central bank is expected to raise its benchmark rate by at least a quarter-point when it next meets at the end of this month.

Excluding volatile food and energy costs, so-called core prices rose 5.7% in December from a year earlier, slower than the 6% year-over-year increase in November. From November to December, core prices increased just 0.3%, the third straight monthly slowdown, after rising 0.2% in November.

On Monday, the Federal Reserve Bank of New York said that consumers now anticipate inflation of 5% over the next year. That’s the lowest such expectation in nearly 18 months. Over the next five years, consumers expect inflation to average 2.4%, only barely above the Fed’s 2% target.

Still, in their remarks in recent weeks, Fed officials have underscored their intent to raise their benchmark short-term rate by an additional three-quarters of a point in the coming months to just above 5%. Such increases would come on top of seven hikes last year, which led mortgage rates to nearly double and made auto loans and business borrowing more expensive.

Futures prices show that investors expect the central bank to be less aggressive and implement just two quarter-point hikes by March, leaving the Fed’s rate just below 5%. Investors also project that the Fed will cut rates in November and December, according to the CME FedWatch Tool.

Fed Chair Jerome Powell has sought to push back against that expectation of fewer hikes this spring and cuts by the end of the year, which can make the Fed’s job harder if investors bid up stock prices and lower bond yields. Both trends can support faster economic growth just when the Fed is trying to cool it down.

The minutes from the Fed’s December meeting noted that none of the 19 policymakers foresee rate cuts this year.

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Still, last week James Bullard, president of the Federal Reserve Bank of St. Louis, expressed some optimism that this year, “actual inflation will likely follow inflation expectations to a lower level,” suggesting 2023 could be a “year of disinflation.”


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