Inflation Is Finally Easing — So Why Does Everything Still Feel So Expensive?
Written by
Laura Bogart
Edited by
Kristen Mae
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These days, you’d be forgiven for feeling like you need to take out a second mortgage to buy a carton of eggs. Going grocery shopping, or doing any kind of shopping, really, can seem like an exercise in frustration. You’re reading headlines that proclaim inflation is going down, yet the cost of items in your day-to-day life still feels high enough to make you wonder if you need a second or a third job. What gives?
The truth is that while inflation easing is a good thing, it doesn’t necessarily mean that prices will drop along with it. Several factors contribute to the contrast between lower inflation and persistently high prices. GOBankingRates broke down some of these differences — and how you can navigate them to keep your budget on track.
There’s a Difference Between Inflation and Prices
If you thought the two went hand in hand, like peanut butter and jelly, you’re not alone — especially given how closely they’re discussed in the news. However, their relationship is a little more complicated.
Writing for The Federal Reserve Bank of Cleveland, Owen F. Humpage noted that inflation is a frequently misused word, becoming a kind of catch-all to describe higher costs. “Strictly speaking, inflation refers only to a drop in the purchasing power of money that results when a central bank creates more money than its public wants to hold,” he wrote.
In other words, inflation measures how much more expensive goods and services have become over a certain period — often a year. But inflation tracks broad economic trends, not the granular costs of individual items. And it certainly can’t foresee other factors that drive up prices, such as hurricanes, supply chain disruptions, or global conflicts. Take eggs, for example. While inflation has eased, egg prices remain high largely due to avian flu outbreaks affecting supply.
Why Individual Prices Feel So High
Once prices go up, they tend to stay there. Writing for Forbes, John Jennings examined the cause of your sticker shock at the grocery store by using almond milk as an example.
He explained that if your favorite almond milk jumps from $3.99 to $4.49 in a year, it has an inflation rate of 12.5% (calculated by dividing $0.50 by $3.99). But even if inflation slows or stops, that higher price is likely to remain stuck where it is.
“Now, after increasing in cost, almond milk is more expensive and likely to stay that way because the prices of most goods are sticky (once they increase, they don’t usually come back down),” he wrote. “So, even if almond milk inflation goes to zero, when you go to the grocery store, you may think, ‘Wow — $4.49 for a carton of almond milk? That’s expensive – I remember when it was $3.99.'”
How Do You Adjust?
Unfortunately, rising prices are well outside the control of everyday consumers like you. So what can you do about it? The best strategy is to live as frugally as you can.
That can mean meal-prepping and buying in bulk or shopping at stores with consistently lower prices. You can also find ways to stretch your budget by looking beyond traditional stores. You might score terrific deals at flea markets, vendor markets, or even community clothing swaps.
Joining your local “buy nothing” group can help you score free items and beat rising costs. You might also want to use cash-back apps and loyalty programs in addition to traditional coupons.
Cutting costs requires creativity and flexibility, but it can be done — and may be easier than you think.
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