As of Thursday, your money buys less than it has in 40 years.
Inflation is rising steadily, along with the prices of things we buy every day.
For every $100 you spent last year, you'd have to spend $107.50 for the same stuff today. Here's where we're noticing the increase the most:
- Used cars cost 40% more than last year, largely because it's so hard to find a new car
- Gas prices are up 40%
- Hotel prices are 23% higher
- Furniture prices are up 17%
- A lot of food items are up more than 10%
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The government stimulated the economy, pumping more money in to help people get through COVID-19, and salaries have also been rising. That's good news – except when consumer prices rise at a faster pace.
"Any number of people who have switched jobs because they felt that they were getting more money are saying, 'It's really hard to feel as though I'm ahead of the game, primarily because I am seeing higher prices and I'm having to adjust to that,'" USF business Professor Dr. Monika Hudson said.
Hudson pointed out that the inflation increase is hitting hardest for many in the Bay Area, where it was already a struggle to make rent or mortgage payments.
The government cannot lower the prices of groceries or gas directly, but it can tighten the money supply by raising interest rates. That usually takes months to show any effect and often leads to higher mortgage rates, which would be felt in the Bay Area.
The Community Food Market, the only urban grocery store serving West Oakland on San Pablo Avenue is closing for good.
“We started out under-resourced as a small business from the very beginning and the pandemic really hit us hard,” said owner Brahm Ahmadi.
The pandemic caused customer traffic to decline about 40% and now the supply chain is making things even worse.
“All of our orders are coming in significantly short so you got a lot of holes on the shelves,” said Ahmadi.
The market has been struggling for a long time and once the latest inflation numbers hit, the owner said he had no choice but to close business.
“The rate of inflation has been moving so fast it’s been really hard to keep up with the price changes,” said Ahmadi.
Economists say to fight inflation on your own, drive less, use less gas and hold onto your car for as long as you can. Also try to pay down debt because it will help if interest rates go up.