The Personal Impact of the Consumer Price Index

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Yesterday morning NPR reported that the consumer price index had risen 4.1% since December 2006. They also reported that although wages have risen, they’re actually lower than they were in 2000 when adjusted for inflation.

I exhaled a stunned breath when I heard the first part. That’s a hefty jump for one year. According to NPR, it’s the biggest increase since 1990. When I heard the second part, I instantly felt poor and angry. I know my salary is higher than it was in 2000, but thanks to massive student debt and other debt, my husband and I both feel poorer than we did in 2000.

The continued rise of fuel prices is a big part of the problem for us.

I drive less than 100 miles a week and have a fairly small tank, but pumping $29 into it when I used to only have to add $15 is frustrating. I have to fill it at least twice a month, so my fuel costs have effectively doubled in the last four years. When gas hit $3 the first time, it started to affect my choices. I now see some of my friends less frequently and attend fewer events because I don’t want to pay for the gas to get there.

Rising food costs also comprised a large part of the increase in the CPI. Those haven’t affected us as much because we don’t buy many wheat or dairy products, but it’s had some impact on our budget. The CPI was only up 2.4% when food and energy are excluded. Many economists choose to exclude those numbers because food and energy are not considered “discretionary spending.”

Now, realistically, when I look at my finances, I know I’m not poor, but I definitely don’t feel well off, or even completely secure. Our income has increased almost 1200% since we got married in 2005 (remember, we were both grad students, and thus actually poor. Not “top ramen for every meal” poor, but “spending all our money on groceries, gas, and books” poor.) We can put food on the table, we can pay our monthly bills, and we can even afford to live comfortably, but rising prices also make us feel more restricted in our choices.

Someday soon I hope that we’ll reduce our debt enough to a level where I will feel more secure even in the face of rising inflation and stagnating wages. Unfortunately, it’s hard to see that day coming when I hear news like this.

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