November 16, 2022

How Is Inflation Impacting You?

 


Are we in a recession? Is the housing market in the midst of a correction? Are the prices at the store changing your buying habits? Have you dropped something from your normal routine because of the cost?

How about retirement? Particularly with a fixed income, the relentless uptick in prices has likely caused a rethinking of what lies ahead.

If so, you are not alone. A new study from Magnify Money reports that 50% report inflation has impacted their retirement strategy, More than half of us report delaying a financial milestone for now. Over the last two years, 20% of us have had to take money from our retirement accounts to cover emergency expenses. If you'd like to see the full study click here.

Personally, the Lowry household has made some adjustments. Between the higher food and gasoline prices, plus the uncertainty and costs of air travel, our shopping lists and plans for the future have been modified or even canceled. The last few months of wild swings in the stock market haven't helped our sense of stability.

The most obvious shift for us has been at the grocery store. We had already reduced our meat eating; the price stickers have accelerated that change. Once a week something involving a read meat is all we are comfortable with, both for cost and health reasons. Chicken has gone way up in cost, too, but it remains an important part of our week's planning.

Eggs have left the building. Usually, we buy just a half dozen a week, for a fried or hard-boiled egg, or maybe a recipe.  With the price for six eggs 300% higher than last spring they are much less likely to be on the list. Pasta, fruits, vegetables, salads, a chicken-based something, and homemade soups are now the bulk of most week's planning. 

In a stroke of good luck, we bought a hybrid plug-in car last March. 26 miles of range on electricity covers most days' worth of errands and trips.  We rarely have to switch over to the gas engine, sometimes doing so just to keep the gas from going bad or deposits forming. In eight months we are only halfway through our third fillup. The old SUV, with its 20 miles per gallon habit, is used only when absolutely necessary.

An expected trip to Portland was shelved earlier this year due to an impending railroad shutdown. Even though the strike was settled at the last minute we had already canceled everything. We lost close to $1,500 in cash, and have $2,100 worth of credit that must be used or will be lost, too.  All this put any additions to our travel budget in a rocky position for the next 12 months.

Occasional periods of inflation are normal in our economic system. Stock markets go up and then come down. Housing prices form a bubble and then drop closer to earth. Those egg prices will eventually return to a more normal level. Being humans, we tend to forget about the cycle and always look for someone or something to blame. 

This time there are some obvious inflation drivers: the effect of the Russian invasion of Ukraine on energy costs, the overspending, by us, on almost everything after two years of Covid shutdowns exacerbating supply and demand issues, a series of Federal Reserve inflation decisions that were slow in coming, and some government stimulus programs that pumped a serious amount of cash into a system still unstable from the pandemic.

Whatever the reasons this time around, I am interested in how it is affecting you.

  • What have you had to cut back or cut out? 
  • Is your income straining just to cover necessities and fewer extras? 
  • Are you driving less, changing your menus, and bypassing movies or other entertainment.? 


Inflation is part of life, but that never makes it easy.


39 comments:

  1. I really watch what I'm buying in the grocery store. We still have good income and aren't yet retired, but my husband is planning to next September. I worry the stock market fluctuating will change his mind. It's impacted travel, but I'm leery still of some travel anyway.

    ReplyDelete
    Replies
    1. You two are in good shape at the moment. The latest figures show inflation may be easing, which will belp the stock market's performance and maybe your husband's concerns over retirement.

      Delete
  2. The rising cost of groceries and heating oil have been the most painful for us. We have always reduced our heating oil expense by depending on a heavy duty wood stove for much of our heat in the winter. This year, all the splitting and stacking of firewood has earned us much less of a discount. Our grocery shopping and meal planning have changed in much the same way yours and Betty's did. I have to admit that they nearly had to resuscitate me in the dairy aisle last week when I stocked up on butter for holiday baking. Ouch! One category we have not allowed inflation to impact much is travel. We saved throughout our lives for it, and we're very conscious of sand slipping through the hourglass of time. That being said, I do tend to focus on campgrounds that offer a substantial discount with our National Parks senior pass. No sense throwing money away - no matter what the rate of inflation is. We're blessed to be in a position where we can weather the (inflation) storm. My heart goes out to all of those who are struggling, and we just sent another donation to our local food pantry last week. This is an extremely difficult period of high inflation for many of the reasons you noted. I imagine younger folks who have not lived through a cycle like this may be having an especially tough time, but it isn't easy for anyone on a fixed income or with limited resources.

    ReplyDelete
    Replies
    1. Inflation is a fact of economic life, but we have had an unnaturally long period of stability, so to many this is a shock.

      You and I have lived long enough to understand the concept of cycles. Younger folks have not so this is new territory for them.

      Even knowing inflationary periods are normal doesn't prepare one for the rapid increases on what are basic food items. 50 cents for one egg? Are the chickens being fed steak?

      Delete
  3. Hi Bob, this is Chris. Spouse is planning to retire the end of 2023. The inflation has changed some of my grocery store shopping. I did raise our budget of that from $400 to $500/mo so I can still take advantage of sales and markdowns. I shop the sales cycles, so buy ahead a lot on staples. I have noticed my money doesn’t go as far. I am still able to stock up like I like, but spread things out more. Like, for instance, sometimes our local store has coffee for a good price, limit 5. Before I would just buy the 5 and be done for awhile. Now I buy 2 and the next time buy 2, etc. They have different brands on this sale regularly, so I was able to stock the quantity I wanted, it just took longer.

    We are fortunate spouse has a company car for work, and I just drive around town. We did go see some family members last weekend the next state over, and the gas was $70 for the trip. So this is becoming more of an expense, and we will need to be mindful of how many trips we make next year to see our elderly parents. Our utility bills have gone up, but so far not a lot. We haven’t gotten our first winter heating bill yet. We are saving to go on a Disney cruise with our kids and grandkids year after next, so don’t plan any big travel in 2023.

    ReplyDelete
    Replies
    1. In passing my daughter is a travel agent that specalizes in Disney!

      We do go shopping with a list, but will adjust it if we see a special. Like you, we will do some pantry-stocking when that happens and then incorporate those items in upcoming menus.

      Delete
  4. We've not made any changes in our food purchasing and crazy as it sounds our YTD monthly average is 9% lower than 2021. We buy as much organic as we can. We don't buy packaged/processed foods and I often wonder if that's significant for many people?

    We've traveled a great deal this year but we did in 2021 as well. I used Credit Card points to pay for 23 days of car rental over 2 trips.

    We drive less than 10k miles per year and gas hasn't been higher than 2021 either.

    I think we must be the weird one-off who have incurred very little impact. We have no debt, incur no variable interest and we constantly look at our retirement funds with a 5 year lens. It's still up 44%!

    The one thing we notices is buying Trex decking boards to build a new 3x16ft garden bed 3 boards high. That cost $482. But 8 heirloom tomato plants at $4.50/pound will breakeven in from Farmer's Market cost in 1 season so there is that.

    ReplyDelete
    Replies
    1. That is both interesting and encouraging that you are skimming above the worst effects of inflation.

      I imagine your guess about processed or highly packaged items is correct. I have noticed something that companies started doing several years ago: shrinking the amount in a package without changing the size of the container. If you look closely, what was 6 oz is now 5 oz but the package looks exactly the same.

      Delete
    2. Funny, the one packaged thing I will buy on sale? Rice-a-Roni was $0.89 yesterday. How many years has it been since we saw that price??? Looking in my pantry, it is literally the only packaged food I have. I shall thank Mom in Heaven for growing up in an all scratch-made-meal kitchen. Cheers Mom :-) Never once did I see a box or bag in her kitchen. I remember talking her into a Sara-Lee poundcake from the freezer once. LOL

      Delete
    3. We had a different situation in my house. Mom was a school teacher. By the time she got home and had a 30 minute break, dinner was a lot of cssseroles made from hamburger, noodles, shredded cheese, and black olives. Fancy was pizza ftom a box! With three sons and a dad who was not picky, we were quite content!

      Delete
  5. We started shopping for a new car . . . forgeddaboutit. And $12.99 for a jar of instant coffee . . . yikes!

    ReplyDelete
    Replies
    1. Over $40k for a compact hybrid. That was the cost of our first two houses combined.

      Delete
  6. Our grocery bill has gone up but since Covid, we are eating at home most all the time. I find that cooking enough for two nights works well -- both for the grocery bill and for the cook to have a rest. :-) I could eat vegetarian most of the time, and I cook accordingly. Chicken, fish and random red meat a few times/week. We do eat some frivolous snacks (Dot's addictive pretzels come to mind -- and they've gone up!) but overall, we're eating the same as we did before inflation spiked. The biggest change for me is not automatically stocking up on anything that goes on sale like I used to. I'm much more careful to shop sale items, Costco, or what we need/will eat. And I'm more conscious of eating all leftovers and not wasting any food.

    Grouping errands has become more important with gas prices. And we are both much more careful to think through wants vs needs which we weren't always careful about during the pandemic -- at least partly because we had low expenses because we went nowhere. But overall, we live about the same with minor variations. And try not to look at the stock market too much. Ha!

    ReplyDelete
    Replies
    1. We have always been big believers in leftovers. With just two in the house, making enough of the main course for at least one, if not two more meals, just comes naturally.

      I check the stock market daily, but don't pay too much attention since I trust our advisor. One thing, though, thank goodness I never got caught up in the cryto currency wave. Greed has its cost.

      Delete
  7. When the inflation rate hit 12.5% in 1980, the highest since World War 2, it did not stop me from doing anything I wanted to do. I feel the same way about this year's inflation. I really don't pay much attention to things beyond my control such as economic indicators. I just tell myself "I'll handle that". I'm certainly not going to worry about stuff just because others are worrying. I expect economic cycles and I'm well prepared for them just like women of child bearing age expect monthly cycles. I will not be spooked and permit the boogeyman inflation to stop me from having and doing things that are important to me.

    ReplyDelete
    Replies
    1. We have not made substantive adjustments but, I will admit to being a bit more aware of costs and wants versus needs. We have always lived beneath our means, so a slight change in behavior now is no cause for concern.

      As Mary mentioned in a comment above, and you do too, time is probably more of an enemy than inflation to us. The clock is ticking louder than it once did.

      Delete
    2. Jake, this is exactly how I feel.

      Delete
  8. The very high inflation we have experienced before and the hyper inflation that has hit other parts of the world makes what we are experiencing now seem quite tame.

    My retirement investments are down a similar amount. With the strong growth that lasted longer than normal, this retrenchment was no surprise and no cause for personal alarm.

    ReplyDelete
  9. Bob, you are so right about the inflation in other countries makes ours seem tame. When I visited Brazil 30 years ago I couldn't believe how happy the citizens were
    in spite of hyperinflation. The average rate of inflation was 317% from 1980 to 2022. That didn't stop the people from enjoying life.

    In contrast, it doesn't take much uncertainty and insecurity to really stress out Americans. It is no wonder the World Health Organization rated the United States as the most anxious country in the world.

    ReplyDelete
  10. I have eaten a plant-based diet (with some occasional fish) for many years now, and though less expensive than animal products, prices have indeed gone up. I have a lot of food storage from my garden, which helps. Between COVID and being an introvert I don't venture out much and try to consolidate my trips when I do. My Prius helps make visits to the gas pump less frequent as well. I am still not ready to resume my yearly trips to Hawaii... and I miss it very much.

    One thing rising food prices has made me take more notice of is the amount of food waste I have been responsible for. Trips to Costco and Trader Joe's would result in a lot of "buys" and bulk that were larger than my needs. My refrigerator would often reveal food pushed to the back of a shelf that would need DNA analysis to identify. I recently discovered Kristen Hong, both online and in her book: "Fridge Love," which is an in-depth exploration of the science of how a refrigerator/freezer works and how best to optimize its function for preservation of individual foods. It has been a game changer for me and my food waste has dramatically declined. My entertainment is largely my books, my music and carefully curated YouTube videos that allow me to learn something new.

    If you look at corporate earnings of late, a lot of this "inflation" appears to be a result of companies taking advantage of the circumstance and raising prices that far exceed their cost of production and historical profit margins. Greed is seemingly always with us. Congress should do something about this (at least public shaming), but I won't hold my breath.

    Rick in Oregon

    ReplyDelete
    Replies
    1. What was Elon Musk's salary at Tesla...40 some million? And, he is not alone in unreal compensation. If I worked for one of these companies I would be disgusted. The value of the company comes from the workers, not the suits or figureheads.

      Food waste always irritates me. I am embarrased to admit that half a head of lettece along with the makings of a basic salad get binned every few weeks, only to be replaced the next grocery run. Stupid.

      Delete
    2. Bob, years ago when the kids were young, I used to buy a head of lettuce every week to make salad. Just about every week I'd end up throwing half of it away and vowed to do better the next week. At some point, I finally admitted that our active family lifestyle was not conducive to prepping salad and I was just kidding myself. I had never purchased packaged greens before because they were "so expensive." Well, so is romaine when all you do is buy it and throw it away. Some years back I finally switched to a large container of organic baby spinach and spring greens. Now, it always gets used, we have salad nearly every night because it's quick and easy to fancy up the greens, and the variety of greens offers better nutrition than a single type of lettuce. There's cost, and then there's value.

      Delete
  11. We, as a retired couple with no debt, experience very little adjustment. I did do the monthly shop and my breath was taken away by the end bill- but it was within budget.
    I cannot say the same for my daughter and son. Each are married with three kids. Their grocery budgets have doubled ( and yes, both tend to cook from scratch). Both families used to eat a lot of turkey- but have cut back. Lots more carb dishes sneaking into meal plans to stretch things. They are anticipating very high heating prices this winter( per their natural gas providers). Both refinanced to a very low rate. Our son has to move next summer and plans on renting. They may just rent out the house they currently own.
    Strange, isn’t it, those that have seem to be little affected. Government programs and 401k just keep rolling. But the lower middle class have nots? Our food bank gave out 60 boxes a month before 2020 & 60 a week in 2020-2021.
    I worked yesterday. We packed 175 boxes and ended up turning people away.Thank God Costco, WinCo and the local bakery gives their surplus to the food bank!

    ReplyDelete
    Replies
    1. Yes, those are working and trying to build a life are often the ones who struggle the most in times like these. Thank goodness your kids were able to refinance before mortgage rates took a big jump.

      One of the charities my wife and I give a good chunk of our charity support to is a local food bank. Like your story, they have seen the demand for support skyrocket.

      Delete
  12. I intend on working part time for far longer than I originally anticipated, as in years longer. That, of course, depends on health, job etc. But for now, it is to work I go! I am now anticipating working until 70 instead of 65. Cindy in the South

    ReplyDelete
    Replies
    1. Working longer is one answer to these trying times, though not everyone is in a job that allows that to happen. You are lucky that could be an option for you. Stay healthy!

      Delete
  13. So far so good here as we continue to slink into retirement. We both came from families that suffered economic setbacks as teenagers, so we learned early to be frugal. Still driving old cars here, but also enjoying life.

    As grandparents, we have concerns for families and others who struggle. At our age we have been through these cycles before. I suspect there is a lot of catching up by manufactures after the economic disruptions of Covid, along with a lot of pent up demand driving spikes in prices. So the inflation is not unexpected, but hopefully will soon level off.

    As we head into Thanksgiving, we are reminded to be grateful for what we have. Peace!

    ReplyDelete
    Replies
    1. Let me emphasize your final thought. Regardless of the inconveniences or need to alter some plans, we remain blessed and lucky ( think Ukraine). Gratefulness is a powerful attitude to take moving forward.

      Delete
  14. I am a frugalista so the household expenses are manageable. I just compared heating/electric costs to last year; there's been no significant increase thus far. I prefer to eat at home for the most part. I'm often disappointed at the quality of restaurant food for the cost. I can easily entertain myself at home. Building supplies have skyrocketed. I had to replace a perimeter fence. The cost of barbed wire & posts was twice the price of a few years ago. I just found a mechanic whose quote was $1200 less than the dealership. There are some things that just can't wait so budgeting & shopping around is key.

    ReplyDelete
    Replies
    1. Necessary expenses can only be pushed back for so long. You are lucky to have found an auto mechanic who is available! In our area even a simple handyman has at least a one month backlog.

      So far our electric costs for our heat pump are in line with last year. The plug-in hybrid car doesn't seem to have added much to the bill. We are using regular house current so that is probably the reason.

      Delete
  15. Feeling it, and yet not feeling it. As was said above, the stressing about it really is worse than the reality for us, speaking as a retired couple with zero debt and pretty modest fixed expenses, relative to our annual budget.

    The primary place we experience higher costs, which I’m not even sure is related to inflation, is at the fuel pump. Otherwise, not really so much. I cook almost entirely from scratch, and raw ingredients are up a bit, but really not to dramatically. I have long bought in bulk when I see proteins go on sale, and that practice has served me well in the current environment. I laugh sometimes at things like bacon ringing in at $11.99 a pound yesterday, before my digital deal brought it down to $4.49. So is that $11.99 even real? Or is the store hoping to simply catch a few unaware people? I feel like if anything there is more of that- plenty of good prices to be found, but you have to really pay attention at the market and play the savings game exactly correct to capture them. I do loathe that, and it makes me appreciate even more stores like ALDIs and Trader Joe’s that don’t play those games.

    Overall we have continued to live below our means in retirement, same as we did in our working years, and these type of periods do act as a good reminder to us both to stay the course. I don’t say that flippantly at all - we sincerely appreciate what we have, recognizing it is not the same for everyone else and now is the time to stay aware and help others as/where we can.

    Tamara R

    ReplyDelete
    Replies
    1. To add with regard to cost of entertainment in this inflationary environment- check out your local colleges! Their prices do not seem to have reason at all. We pay $10-$20 per show or concert, same as over the last five years since moving here. Add in dinner at a brewery, ideally via a high quality kitchen or food truck, and we’re gold- but without spend that!

      Tamara

      Delete
    2. There are bargains to be had. It just takes a little more effort to find the specials. I have heard so many good things about Trader Joes I should check it out.

      In terms of entertainment, there are more free or low cost things to do than there is time. Even special $5 movie showings midday work for us.

      Delete
  16. I am usually silent in this comment section but just want to thank everyone for sharing their experiences. I learn so much here. Thanks to Bob Lowry for providing this format.
    A Blessed Thanksgiving to all…Charlene H

    ReplyDelete
    Replies
    1. A double thank you for the compliment and the holiday wishes. The very best to you and your loved ones on Thanksgiving, Charlene.

      Delete
  17. We have always been frugal, turning out lights when we leave the room. We don’t use the lights much during the day as sunlight does a good job of lighting the rooms. Elvis was the last movie we went to see as I wanted to see it. We are not extravagant as we have always eaten leftovers for lunch the next day. I’ve been driving a lot less since I retired so I don’t worry about the cost of gas. Last summer I locked our Natural Gas senior discount rate in on a two-year contract. We travelled to Hilton Head this year and sailed on the Stars & Stripes America’s Cup Yacht for a dinner cruise. We took a day trip to Buford, South Carolina, which we both enjoyed

    We feel we saved for retirement so we could enjoy ourselves.

    We’d rather spend our retirement savings on ourselves than leave it for the tax man.

    ReplyDelete
    Replies
    1. There has been a lot written about enjoying the money we have spent a lifetime saving. When one's health permits it, and if the urge is there, then the type of trips you mention are perfect for converting money into memories.

      I thought about seeing Elvis when it was in the theaters, but figured it would be on one of the streaming channels soon enough. We did see Where the Crawdads Sing in the theater. It is now streaming on Netflix just a few months later. BTW, the book is really worth reading.

      Delete
  18. We seem to have had a number of shocks in the country recently -- financial and cultural being chief among them. I don't think this time is necessarily much different than other shocks in the past, but we did enjoy a long, profound period of general stability after World War II, so our collective memory might be a bit skewed. With global pressures in full force because of technology and connectivity, I don't think we can insulate ourselves in the ways we have in the past. I guess all that is to say that periods of accelerated change and pressure help remind me of who I am and what is important. I am very grateful for what I have, and the comments in this section seem to suggest others are grateful for what they have as well. I guess how we respond to these challenges reveal quite a bit about who we are and what we believe.

    ReplyDelete
    Replies
    1. We do tend to have short memories regarding what seem to be unique situations but are just the natural cycles of life.

      I agree that taking a deep breath and realizing what blessings we do have is the wisest course of action. Personally, I am a big believer in the power of attitude to make a huge difference in how we deal with adversity.

      Delete