Budgeting in a High-Inflation World: How To Build a Plan That Actually Survives Higher Prices

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Inflation always drives up prices over time, but ever since the pandemic, consumers have felt the pinch a bit more. After hitting a 40-year peak at 9.1% in June 2022, the consumer price index (CPI) has fallen dramatically, but the costs of many basic goods and services remain much higher than they were before the pandemic.

With every dollar stretching thinner, most Americans need to adjust their budgets to the reality of elevated prices. Here’s a look at just how much prices have jumped and how you can tailor your approach to real-world data.

Accept Inflation’s New Reality

While inflation is no longer increasing nearly as much as in 2022, it hasn’t disappeared. In fact, it has remained stubbornly persistent, and well above the Federal Reserve’s target of 2% annually. 

According to the Bureau of Labor Statistics (BLS), the CPI rose by 2.7% over the 12 months ending November 2025. That’s actually a relatively manageable amount, and in line with long-term trends. As with any average, however, the CPI can often mask some of the real-world price increases that affect Americans more directly.

In that same CPI report, the BLS data showed that various other categories increased by significantly more over the prior year, including the following.

• Meat, poultry, fish and eggs: Up 4.7% year over year
• Nonalcoholic beverages: Up 4.3%
• Food away from home: Up 3.7%
• Full-service meals: Up 4.3%
• Electricity: Up 6.9%
• Natural gas: Up 9.1%

While other costs did not increase as much — hence the average of 2.7% — these specific areas directly affect most Americans. What this means is that in some areas, your budget should be flexible enough to factor in price jumps of about 5% to 10%.

Understand That Budgets Are Unique

While budgets tend to have the same broad categories, your personalized spending habits are likely very different from those of your friends and neighbors. If you eat at home all the time, for example, you can eliminate, or at least greatly reduce, the line item for restaurants. But in that scenario, you’ll also have to boost your grocery budget significantly. Eggs, for example, cost 10.9% more in August 2025 compared with one year earlier, according to the USDA’s Economic Research Service, while beef/veal prices rose 13.9%. If your household consumes a lot of meat and eggs, you’ll have to tailor your budget accordingly.

Some of the biggest price increases in 2025 came from streaming services. According to the Los Angeles Times, the average streaming service boosted its price by 12% in 2025. The cost of Apple TV+ jumped an even greater 30%, while Netflix’s cheapest ad-free plan now costs 16% more than in 2024.

A January 2025 report from TVision showed that the average American household uses 3.9 streaming apps, amounting to a considerable line item in most budgets.

How To Manage an Inflationary Budget

The best way to start building a realistic budget is to use your real-world income and expenses. As year-end 2025 is rapidly approaching, that’s a great time to review your actual cash flow during the current year.

Once you have that starting point, here are some steps you should take to prepare for inflation in the coming year.

1. Apply realistic inflation multipliers in your primary spending categories: If you mostly eat at home, for example, you might want to adjust your next-year budget for groceries up by 5%. Your streaming service budget might have to be adjusted upward by 10% to 20%.
2. Use real-world dollar amounts: Starting with your current-year expenses, bump them up by the inflation multipliers to come up with actual dollar amounts. For example, if you spent $500 per month on groceries and $140 on streaming services, budget $525 and $161 per month, respectively.
3. Create a contingency category: While you can make your best guess about changes in inflation, it’s impossible to predict it accurately. Create a “spillover” category of perhaps 3% to 5% of total spending to account for runaway inflation in other categories. 
4. Make necessary adjustments: If your bumped-up spending eats away too much of your income, it’s time to make some hard decisions. You may have to trim some of your discretionary categories, like travel or eating out, if expenses in core categories like housing, food and utilities run too high. 

This type of budget prepares you for inflation rather than adopting a “hope for the best” type of strategy. 

No one likes to spend more money, especially on basic necessities, but the reality is that inflation is relentless and omnipresent, except in the rare cases of a recession. But by being proactive and anticipating inflation, you stand a much better chance of being able to absorb higher prices. The core takeaway is that your budget for 2026 should reflect the higher prices you expect to spend going forward, not the rearview figures that you spent in the past. 

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