Inflation Watch: Used Vehicle Costs Down, Food Prices On The Rise

Q: What does “Inflation Watch” mean?

“Inflation Watch” refers to monitoring changes in inflation metrics like the Consumer Price Index to track rising or falling costs for goods and services over time.

Q: Why did used vehicle prices fall while food rose?

Used vehicle prices can drop due to increased supply or weaker demand, whereas food prices rise from factors like supply chain issues, weather, and higher input costs for producers.

Q: How does the CPI affect everyday consumers?

The CPI influences the cost of living, guiding household budgets and affecting decisions on spending, saving, and borrowing as essentials like housing and groceries change in price.

Q: Which categories saw the biggest changes in the latest CPI?

In the recent report, housing and energy showed notable increases, food rose modestly, and used vehicle prices and some energy services decreased.

Q: How can I protect my finances during rising inflation?

Respond by reviewing budgets, prioritizing essential expenses, considering inflation-resilient investments, and locking in favorable loan rates or refinancing when appropriate.

Published by

Clara

Mar 28

Inflation Watch: CPI Trends and Price Shifts

Inflation continues to be a major topic of discussion. Over the last few years, consumers have been reaching deeper into their wallets for everyday expenses — from groceries and auto insurance to rent and mortgage payments.

There’s both encouraging and concerning news. The encouraging part: overall inflation has been hovering near 3%. Prices climbed 3% over the 12 months ending in September, according to the monthly Consumer Price Index published by the U.S. Bureau of Labor Statistics. That’s slightly up from 2.9% for the 12 months ending in August.

The concerning part? Certain costs remain noticeably elevated. Housing, for instance, is up 3.6% year over year this month. And utility gas service jumped a substantial 11.7% year over year.

While there’s no one-size-fits-all remedy to tame every facet of inflation, the metric economists — and careful savers — rely on to monitor its movements can be explained, along with what it signals for everyday people and how it shifted this month.

What is the CPI?

If you’re unfamiliar, the Consumer Price Index is a monthly release from the U.S. Bureau of Labor Statistics. It gives a snapshot of key inflation areas tied to items people buy routinely.

“The CPI covers essential goods we need, like food and energy, plus other purchases we make regularly, especially services that include labor costs, like home maintenance and personal care,” said Joe Camberato, CEO of NationalBusinessCapital.com. “When the CPI rises, especially in areas such as dining out and services, it means our outlays are increasing, which impacts our purchasing power.”

So how does the BLS compile this data?

Each month, the BLS collects samples from 75 urban areas around the country. The dataset includes roughly 80,000 price quotations from about 22,000 retail and service outlets and 6,000 housing units. The data isn’t flawless and notably excludes many rural figures. Still, the BLS estimates these figures represent pricing trends for about 93% of the U.S. population across categories like food, housing, energy and medical care.

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Why the CPI Matters

The CPI is a practical instrument for seeing which parts of everyday spending are becoming more (or less) costly. It’s useful when fine-tuning budgets, investments and savings plans.

“Consumers can use the CPI to gauge and prepare for how their cost of living will evolve over time,” said Cliff Ambrose, founder and wealth manager at Apex Wealth. “By watching CPI patterns, they can tailor their budgets and anticipate shifts in expenses for essentials like housing, groceries and healthcare.”

Knowing the CPI can help more than budgeting. It may also hint at how and where to place discretionary funds.

“If CPI releases point to rising inflation, consumers might consider allocating money to assets that historically perform well in inflationary times, such as real estate, commodities or Treasury Inflation-Protected Securities (TIPS),” Ambrose said. “They may also want to lock in fixed-rate agreements or explore refinancing debt to secure lower rates.”

Now, let’s examine this month’s CPI findings.

What Increased:

The CPI report published in October covers data collected in September. Here are the items that rose:

Overall CPI increased in September: The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.3% in September after also increasing in August. Despite this uptick, yearly inflation remains at 3%.
Housing: The shelter index continued to climb in September, up 0.2%. Over the past year, the shelter index increased 3.6%, reflecting costs for both homeowners and renters.
Food: Food costs rose 0.2%, with subindexes showing food at home up 0.3% and food away from home up 0.1%.
Energy: The energy index jumped 1.5% in September. Some subcomponents were higher too — energy commodities rose 3.8%, gasoline 4.1% and fuel oil 0.6%.
New vehicles: The index for new vehicles climbed 0.2%.
Transportation services: This index increased by 0.3%.
Apparel: Clothing prices rose 0.7%.
Commodities: In September, the index for commodities excluding food and energy grew by 0.2%.

Other notable increases: The index for all items less food and energy rose 3% over the last 12 months. Additional categories with notable year-over-year gains include medical care (up 3.3%) and recreation (up 3%).

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What Fell:

These CPI categories dipped in the last month:

Energy services: This category decreased by 0.7%; utility (piped) gas service fell 1.2% and electricity dropped 0.5%.
Medical care commodities: This declined by 0.1%.
Used vehicles: Prices for used cars and trucks decreased 0.4% in September.
Motor vehicle insurance: This category slipped by 0.4%.

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What This Means for You

Here are some takeaways for dealing with this month’s inflation movements.

Housing: Housing costs have been rising steadily this year for both owners and renters. What it means: Save extra for housing expenses, especially if you have an adjustable-rate mortgage or are planning a new mortgage or lease renewal soon.
Food: Food prices have climbed over the past year, rising 3.1% over the last 12 months. What it means: Be selective about grocery shopping and careful about when and where you eat out.
Apparel: The uptick in clothing prices may put new purchases out of reach for some. What it means: Consider buying secondhand or avoiding impulse purchases.