Stuff is expensive: Prices are above 2020 levels but no longer rising as quickly
Stuff is expensive
It’s hard to talk about the economy without discussing the elephant in the room — inflation.
Not for decades has the “i word” been so widely used, with the Federal Reserve raising interest rates at an almost unprecedented pace in a bid to fight inflation.
But are prices still rising? The most commonly cited data is the CPI Index, which was up 3% year-on-year in its most recent reading. That is way down on the peak reading of +9.1% back in June 2022, but it means that prices are still rising — just at a slower rate. One way we like to slice the numbers is to simply measure everything from one point in time (Jan 2020 in this case).
Cheaper by the dozen
So, relative to the start of 2020, how are prices looking? Well, the average basket of stuff — which includes goods and services — is now 17% more expensive than it was. That means, if your life looks anything like what the statisticians at the Bureau of Labor Statistics think is “average”, you need 17% more cash to do everything you used to do in Jan 2020.
The reality of course is much messier. If you’re an omelet lover, you’ve been on a roller coaster. At one point in January of this year, eggs were costing 94% more than they were 3 years prior. Prices have since fallen sharply, but eggs are still some 27% more expensive than they used to be. The average price of meat is up 22%, gasoline is up 24%, electricity is up 24% and buying a used car is likely to set you back 44% more than it would have done 3 years ago. One notable category that’s gotten cheaper is airline tickets as airlines have hired aggressively to meet the pent-up demand from the pandemic.
