Inflation 2022: How Rising Prices Impacted Our Wallets Over the Last Year
If there was one buzzword in the financial world in 2022, it was inflation.
Not only did inflation rise faster than it has in more than 40 years, it triggered an aggressive interest rate-hiking cycle by the Fed. The combination of these two factors — rising prices and rising interest rates — has been a double-whammy for consumers in 2022, as costs are jumping for everything from basic necessities to loans.
Here’s a look at the black-and-white numbers of how inflation has impacted American wallets in 2022.
Inflation at the Start of 2022
Inflation was already rising sharply at the start of 2022, but it turned out to be only the beginning. In Jan. 2022, the 12-month change in the inflation rate was 7.5%, the highest year-over-year gain since Feb. 1982.
For the past few years, inflation was running at very negligible rates. In 2020, for example, the CPI rose by just 1.4%, and in 2019, it increased by 2.4%.
Peak Inflation — June 2022
As high as inflation was at the outset of 2022, it continued to grind higher into the summer. By June 2022, inflation had peaked for the year, nearing double digits with a 9.1% gain.
The rate continued to climb on a month-by-month basis before June, however, jumping 7.9% in Feb., 8.5% in Mar., 8.3% in Apr. and 8.5% in May. Inflation began to slowly fall after June but remained stubbornly high, still running at 7.7% in October.
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How Much Did Basic Necessities Rise in 2022?
Generic inflation rates are good indicators of how prices are rising in the economy as a whole, but they may not specifically apply to your personal financial situation.
For example, oil prices have risen dramatically in 2022, but if you don’t own a car and use public transportation, it may not directly affect you all that much. On the other hand, if you’re a road warrior who sits in a car two hours a day, five days a week, the skyrocketing cost of gasoline could be creating a serious dent in your budget.
In fact, while the headline inflation number was 7.7% in Oct. 2022, various categories of expenditures saw price increases much larger than this — and perhaps surprisingly, some things actually ended up costing less compared to the year prior.
Overall, energy costs rose 17.6%, food at home jumped 12.4% and all other costs less these two categories rose 6.3%. But within these broad categories, prices varied wildly. Here’s a look at how inflation has impacted common basic necessities in 2022:
- Food at work and school: up 95.2%
- Eggs: up 43%
- Airline fares: up 42.9%
- Gasoline: up 17.5%
- Roasted coffee: up 15.6%
- Milk: up 14.5%
- Baby food: up 10.9%
This small sampling shows that costs for many household necessities have risen even more than the general inflation rate — in some cases, by a significant amount. However, some costs have actually fallen, including the following:
- Wireless telephone services: down 1.4%
- Beef and veal: down 3.6%
- Televisions: down 16.5%
- Smartphones: down 22.9%
While consumers can’t live on these items alone, it’s at least good news that there are pockets of affordability in the midst of the current inflationary crisis.
How Much Your Salary Would Have Needed To Increase To Keep Pace With Inflation in 2022
As with any financial situation, there is no one right answer for all people. If you spent most of your money on eating at work and school, for example, or if you spend long hours in your car, a large portion of your personal costs may have risen by 17.5% to 95.2%, far above the stated inflation rate of 7.7%. Others may have seen expenses rise by a much more manageable amount.
Using the 7.7% inflation rate in Oct. 2022 as a guide, however, this means that if you got by on a salary of $60,000 in 2021, you’d need to earn $64,620 in 2022 just to maintain the same standard of living. For many households, however, the 7.7% overall rate may understate the actual effects on their budgets.
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