How much inflation costs you each month
As the federal government’s official measure of inflation continue to reach 40-year highs, one obvious question is how that 7.5 percent number translates into the average person’s monthly cash flow.
One estimate puts the average monthly cost of higher prices at $250:
“A lot of people are hurting because of high inflation. $250 a month—that’s a big burden,” said Ryan Sweet, a senior economist at Moody’s Analytics who conducted the analysis. “It really hammers home the point of ‘what is the cost of inflation?’”
Mr. Sweet came up with the figure by comparing what the average household spent under 7% inflation versus the amount it would have spent when inflation was 2.1%, the average in 2018 and 2019.
It’s a ball park figure, and your costs may vary. But broadly speaking, the folks getting hit the hardest are those in the middle class:
Middle-class households were squeezed harder than other groups, with prices up 6.7% in December. That is 0.5 percentage points higher than for the lowest and highest income brackets. Transportation costs proved decisive here: Middle-class households spend a bigger share of their budgets than others on gasoline—its price was up nearly 50% in December—and used vehicles. Higher earners tend to buy new cars, prices for which climbed at a slower rate. Just 72% of households in the bottommost earning group owned or leased vehicles in 2020, compared with 90% overall, according to Labor Department data.
Not the sort of information a majority party (meaning: congressional Democrats) wants to see heading into what was already going to be a rough mid-term election.