We’ve been hearing for a couple years now about how inflation is going to stay low for quite some time. While the economy might be growing at a slow pace, and while core inflation (a measure of inflation that leaves out food and energy prices) looks like it’s growing at a slow pace, the reality is that you, as a consumer, are likely to be feeling the pinch.
Indeed, the current situation means that wages have by and large stagnated, but prices are going to rise — and they are likely to be the prices that directly impact you as a regular consumer. No matter what the policymakers and experts say, your experience is likely to be very different.
Food Prices Set to Rise
The USDA predicts that food prices are likely to rise at least 3% in 2012. That’s a pretty hefty boost, and it’s hard to reduce your exposure to inflation when it’s food inflation. You can grow your own food to help offset some of the costs, and save it (bottle, dry, or freeze) for later. However, chances are that you are largely going to be impacted by these prices.
Energy Prices Heading Higher
While modest increases are expected in the cost of electricity, as well as in other areas related to energy, what’s really going to hit you in the wallet is the price of gasoline. Some are predicting $5 a gallon gas for some markets this summer. It’d be nice if releasing some of the oil reserves and drilling more in the U.S. would help, but, any relief from such measures would likely be short-term and relatively small. Oil is a global market, and that means the price of gas is likely to be more influenced in the long run by geopolitical issues (even though we get most of our oil from Canada and Mexico) and demand from the growing middle classes in Asian countries.
Health Care Costs Continue to Rise
No matter what the Supreme Court decides to do about the Affordable Care Act, one thing is certain: Health care costs are going to rise under the current system. If the recent reform act remains intact, prices will rise over time. If the law ends up being struck down, prices will still rise. The law didn’t offer any truly fundamental changes to our system, and that means that health care costs will continue to rise. I see substantial yearly increases in my health insurance premium, and I rarely make more than one preventative care visit to my doctor. You can live healthy to help combat the costs, but the fact remains that you will still continue to see premium hikes — no matter what you do.
Higher College Costs
Finally, if you are paying for college, you will see continue rises in costs. (Unless, of course, the higher education bubble bursts.) From higher student loan interest, to higher tuition and fees, the cost of college is rising much faster than the rate of inflation.
It’s fairly obvious that many consumers are feeling the pinch of rising costs. This is because the expenses that are most likely to cost us the most continue to rise in price — and they are mostly things that many of us can’t do without.