velera How Credit Union Innovation Can Drive Gen Z Engagement May 2024 Banner

Inflation’s Still With Us as Food and Shelter Were Pricier in January 

The latest data from the government on consumer prices indicates a bit of weary truth: Inflation’s settled in, seemingly for the long haul.

The Bureau of Labor Statistics noted on Tuesday (Feb. 13) in a news release that, overall, prices were up 3.1% in January, as measured year on year and 0.3% higher as measured month on month.

The report has thrown some cold water on speculation that the Fed was going to cut rates sooner rather than later. But the details show that, in the meantime, the costs of everyday staples such as food and shelter are continuing to rise.

Shelter was 6% more expensive than a year ago, when pitted against last January, and accelerated month over month. In January, the cost of keeping a roof over one’s head was up 0.6%, a marked increase from the 0.4% and even flat monthly readings seen headed into the final months of 2023.

Digesting Higher Food Prices 

The overall measures of food-related prices were up 2.6% year on year, and food prices surged 0.4% from December.

Food consumed at home — a proxy category for grocery shopping — was up 0.4% month on month. That’s a boost from the 0.1% month-on-month rate recorded in December. Food consumed outside of the home setting, at restaurants, was 0.5% higher in January, more than the 0.3% rate of gains in December. Dining out is 5.1% more expensive than it was a year ago.

Even clothing cost a bit more, up 0.1% in January, where the past several monthly readings had been either down, or flat. 

The costs of simply existing has pinched our collective wallets a bit more. And given the fact that the January data comes in the wake of the holiday spending surge, the impact of higher prices paid by consumers in January may have been felt more keenly than before.

In “New Reality Check: The Paycheck-to-Paycheck Report, PYMNTS found that 83% of consumers said that they had at least some concerns about current and near term economic conditions, and inflation remains a key concern.

Collectively, we’re shouldering higher debt loads headed into the second half of the second half of 2024. PYMNTS has found that more than 40% of consumers expect interest rates on loans to increase this year.

Since the inflation data as noted above does not give any real sense of certainty that central bankers will cut rates, the implication is that the cost of paying down monthly credit card bills, which are variable-rate debt holdings, will remain elevated. As a result, roughly 20% of our paycheck-to-paycheck respondents expect to see at least some decline in their savings. Those cash holdings may be tougher to replace in an environment where the saving rate on disposable income has been pressured.