Just about everyone is talking about inflation right now. You’ve probably heard adults in your life complaining about the price of eggs and gas, for example, but what’s the big deal? Let us explain…
At the time of publication, the rate of inflation in the U.S. was 6.5%
An item that cost $5 last year now costs $5.33
An item that cost $100 last year now costs $106.50
And while that might not sound bad, here’s why it can cause stress nationwide:
That’s more than Michelle has in her budget. She’s left with three options, none of which are ideal:
- Cut something from her monthly budget; the first things to go are usually wants and activities.
- Cut back on how much money she saves each month or use her savings to absorb the overages
- Use a credit card to absorb the overages
While it may not seem like a huge increase, in the long run, inflation causes people to cut back spending on luxuries or delve into credit or their savings to keep up with the cost of goods.