“Inflation numbers were… not good,” associate professor Justin Buchler of Case Western University told Audacy this week.
Year-over-year inflation is at a three-year high of more than 4%, and a bunch of everyday items are more expensive than last year. Let’s take a look at what’s been draining our wallets.
Energy
According to the Wednesday consumer price index report from the Bureau of Labor Statistics, the energy index rose 3.9% in May accounting for 60% of the monthly all items increase last month. In April, it rose 3.8% and in March it rose 10.9%.
Gas has been a particular drain on American consumers since the U.S. joined Israel to attack Iran, a move that resulted in a blockade of the Strait of Hormuz, an important trade route for oil. Per the BLS, prices for all types of gasoline increased by more than 40% during the 12-month period ending in May. Prices jumped up by 21.2% in March, after President Donald Trump announced that we had entered the conflict with Israel and Iran.
Fuel oil prices jumped up nearly 60% in the 12-month period ending in May. As of Friday, AAA data showed that average per-gallon gas prices in the U.S. were still over $4.
Summer travel
With higher gas prices travel gets more expensive too, News Nation noted. Citing Kayak, the outlet said that average domestic plane ticket rose to $388 near the end of May, $306 at the same time last year. Airline fares increased by 2.7% in May, according to the BLS.
Of course, higher prices at the pump mean that road trips are more expensive, too. Audacy reported last year that many Americans were already going into debt to take a summer vacation, and this year, experts have predicted that gas prices could reach record numbers if the conflict with Iran persists.
Other items that have become more expensive
Beef and veal prices are up nearly 13%, and an outbreak of New World screwworm that has made its way to the U.S. could make prices go up even higher. News Nation noted that prices for jewelry are up 21.4% compared to last year, while coffee is up 17.5%, postage is up 14.5% and fresh vegetables are up 11.9%.
Everything (sort of)
Ok, “everything” has not really become more expensive, but it might seem like it, and there’s a reason for that. News Nation noted that inflation outpaced average hourly earnings in May (4.2% to 3.4%), which was a “departure from the past three years,” according to the outlet.
When wages fall behind inflation, it’s hard for consumers to stay ahead of prices, even as some costs have fallen. According to News Nation, items that are now less expensive than last year include: eggs, butter, cheese and related products, medicinal drugs, used cars and trucks, motor vehicle insurance and major appliances.
What’s next?
Trump said this week that he expects the U.S. and Iran to come to a peace agreement over the weekend. He also said the agreement should lead to lower gas prices if it goes through.
“Nobody likes inflation,” said Buchler. “At 4%, obviously, it’s a lot better than when it peaked at around 10% a couple of years ago. But 4% is not good.”
Typically, the Federal Reserve Bank raises interest rates to tame inflation, though that approach also makes it more expensive for consumers to borrow money and afford those costs that have become more expensive. Trump is against rate hikes and actually wants the Fed to lower rates, Buchler said.
