Consumer prices have been on the rise for several months now and the latest data from the Bureau of Labor Statistics shows the trend of higher prices is still going strong.
“Households are seeing higher costs at every turn,” said Greg McBride, chief financial analyst for Bankrate.com. "We saw the biggest increase in the Consumer Price Index in almost 40 years and it was pretty pervasive across staples."
The Consumer Price Index for November shows prices jumped by 6.8% over the year. Read more about the latest Consumer Price Index here.
“Higher prices are being driven by a few different factors,” McBride said.
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McBride said supply chain issues, higher demand and, in some categories, even weather are fueling the price hikes.
Energy prices saw some of the highest increases last month, with the price of gasoline jumping 58.1% over the year. The category of energy services, which includes electricity and piped utility gas service, saw an increase of 10.7%.
The price of used cars and trucks continued its upward trend, with a 31.4% increase over the year.
The cost of food at home and food away from home saw increases as well with hikes around 6%. The price of meats, poultry, fish and eggs jumped 12.8% over the year.
“The significance isn’t just the level of the price increases, but the fact that it’s coming in categories that are absolute staples of the household budget,” McBride said. “These aren’t things that you can do without.”
That also includes housing. The cost of rent was up 3% over the year, according to the consumer price index. But the reality in many housing markets across the country points to even bigger increases.
“The shelter cost that you see in the consumer price index, they lag what happens on the ground,” McBride said. “A lot of people who have purchased a home this year have gotten sticker shock. Anybody that’s in the process of renewing a lease has probably gotten sticker shock and that’s one that’s going to be around for a while.”
McBride said we could start to see relief from the higher prices sometime in 2022.
In fact, the US Energy Information Administration is forecasting gas prices will fall below $3 a gallon, on average, sometime next year. You can read more about that report here.
But until prices start to level off, many consumers will have to make difficult choices.
“Particularly for those that are living paycheck to paycheck, you can’t continue to just operate as status quo,” he said. “There may have to be some tough choices that are made, so you don’t end up in a situation where you’re running up credit card debt to absorb these higher expenses.”
McBride said if you own your own home and you haven’t already refinanced your loan, you may want to look into it. Rates are still very low, he said, and you might be able to lower your mortgage payment by a couple hundred dollars.