Inflation Rate Affects People Differently Depending On Their Circumstances
PITTSBURGH (KDKA) - The inflation rate grew in January, up to 7.5 percent over the last year.
As money editor Jon Delano reports, the inflation rate affects people differently depending on their circumstances.
In recent decades, we've gotten used to inflation of between 1 and 4 percent each year. But with this rate of 7.5 percent, you have to go back to Ronald Reagan in 1982 for inflation this high.
As to its impact on all of us, that depends on a number of factors.
First, the good news. While the monthly inflation rate hit 0.6 percent in January, that's down from the high months of October and June when it hit 0.9 percent. But don't expect much change in the near future, says Duquesne University economist Professor Antony Davies.
"I think we're going to be seeing some significant inflation from here on out," says Davies.
But just because the Consumer Price Index, or CPI, annual inflation rate is 7.5 percent doesn't mean that's the rate here in Pittsburgh.
"CPI, which is what we use to measure inflation, is based on the things that a typical urban consumer would buy. So if you live outside New York, Los Angeles, the further you live away from those places, the less you're going to experience what the CPI says," says Davies.
While the West and South have the highest inflation at nearly 8 percent, the mid-Atlantic, our region, has the least at 6 percent.
It also matters what you buy and the services you use. For example, over the last year, gasoline has gone up 40 percent.
If you drive a lot, you feel that pain at the pump, but, says Davies, "You take the bus, you don't feel the significant inflation we've been feeling at the gas pumps."
It's the same at the grocery store where CPI prices have jumped 7.4 percent overall with meat leading the way at 12 percent. But if you stick to fruits and vegetables, prices went up just under 6 percent, while dairy products were up 3 percent.
"[It] makes a difference what you decide to eat. It also makes a difference where you decide to live. The closer you are to the supply chain, the easier it is to get the food to your grocery store, the lower the price will be," says Davies.
While clothing went up 5 percent, once again, it really depends on what you buy. While women's dresses jumped 11 percent, girls' apparel actually dropped slightly in prices.
The bottom line is that by carefully managing what you buy, you can keep your personal inflation rate well below 7.5 percent.