Inflation jumped 9.1 percent in June, making cost cutting more important than ever
By Penelope Wang
With additional reporting by Octavio Blanco
Consumers continued to be hammered by rising prices in June, with inflation soaring at a 9.1 percent annual rate, the steepest in over 40 years.
Despite the bad news, there are still ways to lessen the burden on your wallet. And in an encouraging development, the prices for gas and some major appliances have started to come down, although those decreases have not yet had much impact on the inflation data.
Overall, however, the inflation numbers continue to be alarming. Last month’s 9.1 percent increase in the nation’s main inflation gauge, the Consumer Price Index (CPI), was led by steeper costs for gas, shelter, and food.
That surpasses the most recent high of 8.6 percent in May, and by comparison, an average inflation rate of just 1.4 percent nearly two years ago.
Energy costs continued to surge last month, rising 41.6 percent over the past 12 months, a 7.5 percent increase from May, while food prices jumped 10.4 percent year over year.
“The increase was broad-based, with the indexes for gasoline, shelter, and food being the largest contributors,” according to a news release on Wednesday from the Bureau of Labor Statistics.
But even taking out volatile food and energy prices, the so-called core inflation rate was up 5.9 percent over the past 12 months.
Prices have jumped in the past year due to a number of factors, including billions of dollars in government stimulus spending, sharply higher consumer demand, COVID-19-related bottlenecks in the supply chain, and, more recently, the impact of war in Ukraine on energy supplies.
Some forecasters have been hopeful that inflation may be nearing a peak, but last month’s increase suggests that further Federal Reserve rate hikes may be needed to slow the price increases.
“Consumer price inflation going forward is shaping up to be much better due to falling energy prices, better-functioning supply chains, and easing shortages, as the pandemic continues to fade,” says Mark Zandi, chief economist at Moody’s Analytics. “But getting inflation consistently back down to the Fed’s 2 percent target will take a good 18 to 24 months.”
For shoppers, these larger prices still require careful planning and perhaps a budget overhaul.
“Maintaining a cash reserve can be helpful if larger bills or unexpected expenses come in,” says Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth in New York City. “Keeping track of your cash flow is helpful in navigating any financial environment.”
Here’s what to look for in several key spending categories, with tips for reining in your costs.
Food
The surge in food prices reflects a steep increase in the cost of meat, poultry, fish, and eggs, which rose 11.7 percent over the past year.
To help keep your food budget under control, take full advantage of any promotions to stock up your freezer and pantry.
You can also save significantly by sticking with warehouse clubs and discount stores, such as Costco and Trader Joe’s, as well as private-label brands, says Burt Flickinger III, managing director at Strategic Resource Group, a retailing consulting company.
Another strategy is to scout for food bargains at drugstores and convenience stores. Some outlets are expanding their variety of fresh foods and may offer lower prices than traditional stores.
Energy
Retail gasoline prices climbed 11.2 percent in June, following a 4.1 percent increase in April. Over the past 12 months, gasoline prices have risen 59.9 percent.
Still, drivers have started to see some relief. AAA data shows that gas prices fell to $4.63 per gallon as of July 13, down from a high of $5.02 about a month ago.
That decline reflects a recent dip in oil prices, which have fallen on concerns over slowing economic growth. Improved U.S. oil production has also helped put a lid on gas prices.
Still, given the continued war in Ukraine as well as other uncertainties, gas prices are likely to remain volatile.
“Whether there’s a hurricane in the Gulf or some other disruption, gas prices could turn around on a moment’s notice,” says Patrick De Haan, head of petroleum analysis at GasBuddy, a website and an app that help drivers find the best deal.
But you can make the most of our strategies to cut your costs. You can find tips in CR’s articles on saving money at the gas pump and buying cheaper fuel at warehouse clubs.
And if you’re planning a summer road trip, try to fill up in states with lower gas taxes.
“If you check gas prices ahead of time to find lower-cost options, you could save $5 to $10 a tank,” De Haan says.
You can also squeeze more mileage out of your tank of gas by driving evenly, sticking to speed limits, and removing your roof rack, which can create drag.
Major Appliances
Costs for major appliances rose 7.5 percent overall in June, but there are signs that prices have started to ease.
A key reason: Some major retailers misjudged consumer demand for big-ticket items, leaving them with an unexpected glut of merchandise they now need to move.
Recent advertisements from a number of major retailers are showing big discounts for major appliances including refrigerators, says Jordan Carter, an associate analyst for GAP Intelligence, which tracks prices for a variety of product categories at retailers across the country.
In particular, retailers are pushing savings deals for consumers who bundle a number of products to purchase, Carter says. This means that those planning to upgrade their kitchens with a new refrigerator, dishwasher, and cooking range, for example, could score even deeper discounts.
But discounts won’t be available across the board on all brands and at all retailers, and consumers will have to make sure to compare prices carefully and be sure to comparison shop at independent retailers, too. They may offer comparable bargains and perhaps better service.
For additional savings, before you shop make sure you know which appliance features you must have vs. those that are less essential, says Nish Suvarnakar, senior market analyst for Consumer Reports. Consider opting for basic stainless steel—a popular finish that’s widely available—rather than a specialty finish. And finally, consider substitutions if your first-choice model is unavailable.
Cars
Prices for new cars and trucks are up 11.4 percent over the past year, driven by pandemic-related parts shortages and even factory shutdowns, as well as a scarcity of computer chips. Used-vehicle prices have climbed 7.1 percent.
That doesn’t mean you can’t find an affordable option, because prices for individual models vary widely. Take a look at our articles “How to Buy a Used Car” and “How to Navigate Surging Used-Car Prices.”
But given the shortage of available cars, consumers should manage their expectations, although a few models do still have traditional incentives available.
“In today’s market, shoppers should be looking for a fair price rather than a great deal,” says Jeff Bartlett, cars managing editor at Consumer Reports. “Big discounts are a distant memory.”
With so few vehicles on dealership lots, the balance of supply and demand favors the seller.
"There is one silver lining for new-car buyers: If you have a car to trade in, increased used-car values have made it worth more than you might think," says Jake Fisher, senior director of auto testing at Consumer Reports. But consumers need to be aware that although they may get a higher-than-expected value on a trade-in car, those gains may be erased by the higher price for a replacement.
If you need a cash infusion, the sweet spot is selling a used car that doesn’t need to be replaced.
"If you have an extra car that you might not need, there’s never been a better time to sell it. A late-model used car in good condition might get a price similar to what it cost when it was new," Fisher says.
For a useful benchmark on car costs, check out CR’s Build & Buy Car Buying Service and online research tool, which allows shoppers to check the current transaction prices for different models. You may find that the best way to get the car you want is to order it or buy it from another state.
And to avoid breaking your budget, check out CR’s advice on the best new-car deals, as well as our recommendations for fuel-efficient SUVs and affordable used cars you can buy right now.
Telecom and Internet Services
Earlier in the pandemic, consumers had a bit of a break because prices for telephone and wireless services rose only slightly.
Prices have fluctuated since then, with internet service costs rising 2.6 percent over the past 12 months and residential phone service dipping 0.1 percent.
To keep a lid on those costs, consider switching to a lower-cost cell phone plan, perhaps one from your internet provider. Lower-income families may qualify for a federal program that helps with internet bills, called the Affordable Connectivity Program.
And although prices are also rising for streaming services, you can still trim your costs by cutting the TV cable cord.
You also might try haggling with your provider. As a recent CR survey of our members found, many have been able to lower their bills by negotiating with their cable or internet company.
Televisions
Consumers enjoyed a big break on TV prices over the past 12 months, with costs dropping 12.7 percent. And the latest numbers show prices dipped 2.3 percent.
The best time to buy TVs tends to be between fall and early winter, when holiday sales begin and the release of new models in January happens, says Samantha Gordon, deals editor at Consumer Reports.
But if you shop around, you can still find affordably priced TVs, such as these bargain 70-inch screens.
Consumer Reports members can get more details about finding the best TV for your money in CR’s TV buying guide.
Smart Shopping
There are plenty of other ways to save money, and Consumer Reports can help.
For instance, we’ve found that some laundry products—washers, dryers, and detergents—waste money. So here are some tips to avoid them.
We also have a CR Deals site, which lists sales on products we recommend, as well as a monthly column on products that are on deep discount. In July, for instance, you can find sales in 14 product categories, including grills, refrigerators, and laundry appliances.
And Consumer Reports members can find out when to buy an array of products by using CR’s Best Time to Buy guide.
Editor’s Note: This article has been updated with the latest government inflation numbers.
Consumer Reports is an independent, nonprofit organization that works side by side with consumers to create a fairer, safer, and healthier world. CR does not endorse products or services, and does not accept advertising. Copyright © 2022, Consumer Reports, Inc.