Inflation Is Easing, But Not Everywhere

Two-Speed Everything

The high inflation of the post-pandemic economy is finally easing up. While that doesn’t mean that everything is getting a lot cheaper, it means that the overall pace of price increases is coming down.

But the thing about inflation is this: It’s measuring the prices of a lot of different products and services. And some things continue to get a lot more expensive.

Economists say the economy is going at two speeds: For some Americans, including those who own a home, or are invested in the stock market, things are looking up. Their home values and portfolios are likely to have grown in the past years. But for other Americans, the economy has become much harder to navigate. Now, higher prices in some categories are threatening to make life even harder.

What Prices Are Going Up?

The Bureau of Labor Statistics’ Consumer Price Index (CPI) is a key inflation gauge that fell to 2.9% year-over-year in July, its lowest level since March 2021. In July, the costs of several key consumer goods fell on an annual basis, including used and rental cars, cell phones, TVs, and airplane tickets.

At the same time, the average cost of car insurance soared by more than 18% on a yearly basis. Rent also continued to rise, as did senior care. Home health care costs rose 9% annually in July, while hospital costs increased more than 6% year-over-year.

Inflation Hurdles

Medical and care expenses are often unavoidable rather than discretionary, meaning that people who face them often don’t have the choice to postpone these expenses. Similarly, many Americans rely on their cars to get to work, making the expense of insurance a necessity.

Higher inflation on necessary or unavoidable categories is putting more pressure on some households, and could exacerbate inequalities in the economy over time.

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