Report: Inflation Will Cost U.S. Households $5,200 This Year

Report: Inflation Will Cost U.S. Households $5,200 This Year


Photo: Inflation poster at the Ferry Market Building, San Francisco, Calif., Feb. 16, 2013 by John Loo

Households will really be feeling the pinch this inflation period. The average U.S. household is expected to spend an extra $5,200 this year (or $433 per month) compared to 2021 for the same consumption basket, according to new estimates by Bloomberg Economics

The report broke down what Americans will be paying more for. About $2,200 of that inflation tax will come from pricier food and energy, said Bloomberg economists Andrew Husby and Anna Wong.

The personal finances of Black Americans will be hit hard.

Inflation hurts lower-income households more than others. Since more Black households happen to be in this economic class, they will feel inflation more than most other groups because of longstanding racial disparities, according to Adewale Maye, a policy analyst on race, ethnicity, and the economy, writing for the Center for Law and Social Policy (CLASP).

This inflation period is expected to last throughout 2022.

While many people have received a boost in their wages and managed to save during the pandemic, these financial surpluses could soon be eaten up by inflation.

“Accelerated depletion of savings will increase the urgency for those staying on the sidelines to join the labor force, and the resulting increase in labor supply will likely dampen wage growth,” the economists said. In other words, as people spend their built-up savings, they’ll need to go back to work, and employers won’t have to pay as much to lure them back.

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The Bloomberg economists are not the only ones warning about inflation. The Consumer Price Index has already shown prices soaring at the fastest pace since 1982. Inflation-adjusted wage growth was negative for most American workers in 2021.

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Even if the average wages increase by 10 percent in 2022, food and energy inflation could fully offset the pay growth, the Bloomberg economists said.

The rising inflation is also having political ramifications.

Black voters are losing their longstanding faith in the Democrats because of rising inflation, which hit its highest level in four decades.

A new poll conducted by The Wall Street Journal found that Black women and Hispanic men had the highest levels of inflation worry among demographic groups. Nonwhite voters are more likely than white to blame inflation for major financial strain, the latest poll shows.

Photo: Inflation poster at the Ferry Market Building, San Francisco, Calif., Feb. 16, 2013 by John Loo, https://www.flickr.com/photos/johnloo/,
CC, https://creativecommons.org/licenses/by/2.0/