Personal finances

Consumer prices rising at historic pace: What it means for your personal finances – Fox Business

Summary

Risks of inflation are rising and consumer prices increased at their highest rate in more than a decade, driven by increasing auto prices. (iStock)

Consumer prices increased in May, surging 5% year-over-year before seasonal adjustment – the highest annual growth since August 2008 when prices rose 5.4% annually, according to the latest Consumer Price Index from the U.S. Bureau of Labor Statistics. The surge marked the highest rate of increase in nearly 13 years and was driven by …….

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Risks of inflation are rising and consumer prices increased at their highest rate in more than a decade, driven by increasing auto prices. (iStock)

Consumer prices increased in May, surging 5% year-over-year before seasonal adjustment – the highest annual growth since August 2008 when prices rose 5.4% annually, according to the latest Consumer Price Index from the U.S. Bureau of Labor Statistics. The surge marked the highest rate of increase in nearly 13 years and was driven by pent-up demand from the COVID-19 pandemic.

If prices are rising faster than you can keep up with, consider taking out a personal loan to consolidate debt and decrease your monthly payments. Check out Credible to help you get started and compare multiple rates at once.

SOME OF THE BEST PLACES TO GET A PERSONAL LOAN

Rising prices overall mean basic necessities like food or transportation are becoming more expensive. Americans who put off buying a car during the pandemic are now venturing out more regularly and in need of a vehicle – only to find that they could possibly be priced out of the market. 

The consumer spending increase was heavily driven by the sharp rise in the index for used cars and trucks, which increased 7.3% annually in May, the report showed. This comes as no surprise, as consumer credit in April increased at a seasonally adjusted annual rate of 5.3% or by $18.6 billion, driven by an increase in auto loans, according to the Federal Reserve’s latest report.

High demand as the economy reopens, low supply shocks and rising inflation are combining to drive a spike in auto prices and auto-lending volumes. Autos accounted for about 30% of all consumer spending items in May, while the food index increased 0.4%.

If you’re looking to take out an auto loan but need to find ways to make it more affordable, consider finding ways to lower your auto insurance premiums. With Credible, you can compare multiple auto insurance providers at once and choose the right plan for you.

HOW TO CHANGE YOUR CAR INSURANCE POLICY

But, with rising prices comes a risk of higher inflation rates. Median year-ahead inflation expectations rose to an annual inflation rate of 4% in May, up from the previous 3.4% in April, according to the latest Survey of Consumer Expectations from the Federal Reserve Bank of New York. This marks the seventh consecutive monthly increase in future inflation expectations and hits an all-new survey high.

If inflation surges, the Federal Reserve may consider raising interest rates. Currently, the Fed does not plan on raising interest rates until at least 2022, but Treasury Secretary Janet Yellen recently remarked that an increase in interest rates may be necessary in order to keep the economy from overheating if future inflation continues to be high.

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Source: https://www.foxbusiness.com/money/consumer-prices-surging-how-it-affects-personal-finances