What inflation means for the everyday things you buy.

It’s not your imagination; everyday expenses are going up. The U.S. Bureau of Labor Statistics reports that the Consumer Price Index (CPI) rose 4.2% from April 2020 to April 2021. The CPI tracks several categories of consumer spending, including things like food, utilities and vehicles. However, prices have not risen equally among all categories; here’s a deeper dive into the April report.

A steep climb for vehicles
If you haven’t priced used cars lately, you could be in for sticker shock. In the last year, used car and truck prices increased 21%, and compared to January 2020, they’re up 23.9%.

The cost of renting vehicles is up even more: 42.4% from January 2020 to April 2021. If you’re planning a vacation that includes a car rental, make sure to account for higher prices in your budget. In many markets, car rentals now average $134 a day. 

Energy prices up, with gasoline the highest
Energy prices are up 25%, but the rise varies by type. Gasoline is up nearly 50%; natural gas 12%; and electricity 3.6%.

Keep in mind that April 2020 was during the early days of the COVID-19 pandemic when people’s movement to work and school was restricted. Gasoline prices dropped in response to less demand. In this light, the steep increase in gasoline prices is not quite as drastic as it might appear to be.

Food prices slightly up
Eating at home is up slightly—1.2% overall. Within this category there are big differences, though. For example, the cost of fruits and veggies is up 3.3% while items like cereal and bakery products increased by less than 1%.

Eating out comes with a bigger check compared to a year ago, too. The CPI shows that limited-service meals, like those at fast-food restaurants, rose 6.2% while full-service meals saw a bump of 3.7%.

 No one can predict the future but you
There are many economic factors contributing to inflation and fears of greater inflation but we can’t predict what’s next. However, two things are certain.

First, it’s smart to have an emergency fund set aside in a savings account for unexpected expenses. This includes when things cost more than planned because of price increases.

Second, when it’s time for a large purchase, shop around for the best rates on auto loans, mortgages and personal loans. Lower rates and fees will make a big difference over the life of the loan and make your dollars stretch further.

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