The ongoing surge in US inflation has translated into a considerable strain on household budgets. Moody’s Analytics reveals that the average American family spent $709 more in July compared to two years ago on identical goods and services.
This substantial increase highlights the cumulative impact of elevated inflation on consumer financial stability, despite recent moderation in price growth.
Mark Zandi, Chief Economist at Moody’s Analytics, emphasized the economic harm caused by persistent high inflation over the past two-plus years.
US Families experience increased expenditures on groceries
Housing costs have been the primary driver of this spending escalation, as they experienced a notable surge. Families have also seen increased expenditures on groceries, vehicle-related expenses, insurance, and entertainment services like cable.
Though wages have grown, the pace has not kept up with the rising cost of living. Adjusting for inflation, real earnings have remained stagnant since late 2019. Zandi attributed this to the lingering effects of the pandemic and geopolitical tensions.
Encouragingly, wages are finally beginning to outpace inflation, and consumer price growth has moderated considerably. This has led to speculation that the Federal Reserve might halt its interest rate hikes.
While the July consumer price increase was a cooler-than-expected 3.2% compared to the previous year, certain calendar effects contributed to this outcome.