How Much the Average American Has Been Impacted by Inflation — How Do You Compare?

How are we going to pay these bills?

Inflation is coming down — but it doesn’t feel like it. Grocery stores are just as expensive, restaurants continue to raise prices, and the cost of living exactly the same way seems to go up, and up, and up!

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A late 2023 survey by GOBankingRates dug into how inflation has been impacting Americans. Here’s a review of the survey results, along with the actual rate and impact of inflation on everyday expenses.

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How Much Actual Inflation Is There?

The current rate of inflation, as measured by the Consumer Price Index (CPI), is 3.1% over the last 12 months, as of February 2024. While this might seem pretty reasonable, it comes after several years of high inflation, compounding the effects of high prices.

In June 2022, inflation rose to a ghastly 9.1% of a 12-month trailing period, and the effects were felt everywhere. Food and gas prices were up sharply, housing costs rose in the double-digits, and life quickly became much more expensive.

So while a 3.1% inflation rate isn’t too bad, it is on top of several years of up to 9.1% inflation, and prices continue to rise — albeit more slowly than before.

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What Categories Are the Most Expensive After Inflation?

While average inflation rates are only 3.1% overall, there are several spending categories that have risen MUCH faster than average rates. Here are a few of them:

• Restaurants: The CPI data shows that “food away from home” costs are still rising rapidly, increasing 5.1% over the past 12 months. This is in addition to an 8.2% increase in 2022 alone.
• Tobacco and smoking products: This category has been running hot for a few years now, increasing at least 6% year-over-year since 2020. In 2023, the increase was 7.1%, much higher than average inflation.
• Housing: Shelter costs continue to rise at a blistering pace, with a 2023 inflation rate of 6%. This makes the housing crunch that much harder and affordability even worse.
• Transportation: Owing and operating a car or paying for other transportation is getting very expensive. In 2023 alone, costs rose by 9.5%, after rising a staggering 14.6% in 2022. This is making it very difficult to own an affordable vehicle.

How Inflation Has Impact Average Americans

With prices rising on consumer staples and everyday expenses, inflation has hurt most Americans. According to the GOBankingRates survey, here’s how Americans are responding to exceedingly high prices:

Moved to a Different Home

According to the survey, nearly 14% of Americans had to re-think their housing situation. With rising rents, double-digit percentage increases to the cost of shelter, and interest rates making buying a home unaffordable to many Americans, this is not surprising.

Choosing to move isn’t cheap, either, as moving costs can be in the hundreds — or even thousands — of dollars. But with housing becoming increasingly expensive, some Americans have had to change their housing situation.

Cut Back on Entertainment Spending

While subscription services are all the hotness, and Netflix keeps pumping out hit after hit, entertainment has gotten very expensive. Whether it’s juggling 15 streaming services, $10,000 Super Bowl tickets or Swifties spending billions on concerts — entertainment costs can blow the budget in a hurry.

A shocking 57% of survey respondents said they have cut back on entertainment spending due to high prices. This could have a massive impact on the entertainment industry, as more and more people are choosing to cancel services and forego expensive events.

Stopped Eating Out

Over 54% of survey respondents said they have changed their food spending due to rising costs. And with restaurants leading the way with over 8% inflation last year, it’s no surprise that Americans have decided to start making food at home.

Grocery stores have gotten much more expensive, as well. Inflation was over 7% in 2021 and 10% in 2022, and while it wasn’t as bad in 2023 at 2.6%, the prices didn’t come down. So food prices are still much more expensive than just a few years ago.

Americans have to be much more cognizant of what they shop for, and couponing is becoming popular again. Meal planning, buying in bulk and shopping deals can help lower food costs each month.

Turned Vacations Into ‘Staycations’

A recent report by FCM Consulting showcases that global inflation in 2024 is expected to by around 5.2%, and airfare costs are expected to rise 3% to 7%. Add that to high inflation across the board, housing affordability issues and the already-high costs of travel, and many Americans are opting out.

According to GOBankingRates’ survey, nearly half of Americans have had to adjust or charge their travel plans due to high costs. This might mean more “staycations” and low-cost localized travel is in store for 2024.

Saved Less for Retirement

Saving for retirement is important, but it’s getting harder because everything is so expensive. Nearly 12% of respondents to the survey have had to slow down their retirement savings in response to inflation.

And while this may not have any immediate repercussions, not saving enough for retirement can have a detrimental impact on your financial future. This is especially true if you’re young and have a long runway for compound interest to work its magic.

Lowered the Thermostat

Utilities went wild in 2021, with energy costs increasing 27%. This has had a huge impact on overall utility costs, and those high prices haven’t come down far enough. While energy costs did decrease in 2023, the huge increases in 2021 and 2022 have permanently increased costs going forward.

This caused 18% of respondents to our survey to remark that they have had to change utility usage month-to-month. This might mean getting a smart thermostat, keeping your home warmer or colder than usual and taking shorter showers.

Some Americans Have Picked Up Second Jobs Because of Inflation

In addition to cutting back on spending categories, some survey respondents said they needed to pick up a second job to help pay for increased expenses. Over 14% of respondents stated needing to take on a side gig to help pay the bills, while 25% said they took on another job for some extra spending money.

While the gig economy has made it much easier to make money from home, working outside of a full-time job is becoming all too normal. According to the Bureau of Labor Statistics, Americans work 8.21 hours per day, or 41 hours per week. Adding in a second job can add another 10 hours per week — or more — making 50 hour work weeks normal.

This amount of work to simply pay the bills or have extra spending money can quickly burn out many adults. And inflation isn’t helping — making it harder and harder to continue affording the same lifestyle.

Will Inflation Remain High in 2024?

Inflation continues to be above the Federal Reserve’s 2.0% target rate, which means interest rates may remain high.

“Inflation will remain sticky due to higher input prices and a slight wage tick up,” said Kevin Thompson CFP, RICP, founder and CEO of 9i Capital Group LLC. “Higher wages get passed through to the consumer via higher prices, which is a double-edged sword. The CPI numbers remain higher, albeit not increasing at the rates they once were.”

This hurts Americans, making housing less affordable — and the rising cost of financing and materials could lead to more increased prices or layoffs.

“The main way to combat inflation is to just save more or purchase cheaper alternatives than normal,” said Thompson.

GOBankingRates surveyed 1,021 Americans aged 18 and older from across the country between Oct. 12 and Oct. 16, 2023, asking twenty-three different questions: (1) How much did you spend on your pet in the last year?; (2) How much have you spent/are you planning to spend on Halloween this year?; (3) How much money do you spend on kid-related activities in a year?; (4) How much do you spend on average on your monthly utility bills (electric, heat/gas, water)?; (5) What spending/saving habits have you had to change in the last year due to inflation/rising prices? (select all that apply); (6) What was the biggest unexpected expense you had this year?; (7) How much do you currently spend on monthly car payments?; (8) Do you live in a single-income or dual-income household?; (9) In the past year, did you have to take on a side gig because of rising prices/inflation?; (10) How much do you bring home from your side job(s) each month?; (11) How much have your overall expenses gone up in the past year?; (12) What are your top financial priorities to end 2023?; (13) What is the top way you’ve earned your money/gained wealth?; (14) Have you started financially preparing for 2024?; (15) How much have you spent on home upgrades in 2023?; (16) How will the resumption of student loan repayments affect your budget?; (17) How much do you currently owe in student loans?; (18) How much do you spend on yourself (not including housing, food, etc.) out of each paycheck?; (19) How much do you spend on online purchases per month?; (20) Where do you shop for groceries most often?; (21) Do you shop around for groceries to get better deals?; (22) What are you currently invested in? (Select all that apply); and (23) What is the current value of your stock investments?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.

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This article originally appeared on GOBankingRates.com: How Much the Average American Has Been Impacted by Inflation — How Do You Compare?