Rampant inflation forced the average American household to pay a whopping $445 more in September for the same basket of goods and services compared to one year earlier, according to the latest calculations from Moody’s Analytics.
Moody’s Analytics senior economist Ryan Sweet tallied the budget-crushing sum after inflation hit 8.2% in the September Consumer Price Index. While gas prices have fallen compared to recent highs, the cost of food and housing are still hovering near their highest level in decades.
The additional $445 in expenses applies to the basic necessities tracked within the Consumer Price Index, including the cost of groceries, gas, housing, utilities, medical care and more.
The massive uptick in the price of daily necessities is a cost that many American consumers can’t afford to pay in the current economy, according to Jacob Channel, senior economic at LendingTree.
“For many households, spending hundreds of extra dollars each month on the same basic necessities that they’ve always bought might not be possible and, as a result, some – if they haven’t already – will likely have to resort to cutting back and reducing their standards of living,” Channel told The Post.
“Unfortunately, in the present, the sting of inflation is all but impossible for most to ignore,” Channel added.
Moody’s calculated its estimate by comparing average US household spending in September to what consumers could have spent in 2018 and 2019, when inflation paced at 2.1%. The Federal Reserve considers 2% inflation an acceptable benchmark for the economy.
The increased costs facing households has actually fallen slightly from its peak. As The Post reported when inflation hit its recent high of 9.1% in June, Moody’s estimated that consumers were paying an extra $493 per month on regular expenses.
Sweet said the September inflation reading “cements” another sharp Fed interest rate hike when policymakers next meet on Nov. 1.
“This isn’t going to sit well with the Fed, and the September CPI isn’t good news for financial markets or the broader economy,” Sweet said in an Oct. 13 research note.
Soaring prices have impacted all aspects of the US economy. The price of groceries jumped 13% in September. Meanwhile, the shelter index, which includes rent, rose 6.6% for the month.
Food prices have risen so sharply that 24% of shoppers said they often purchased fewer items than usual in September, according to a Morning Consult survey. Additionally, 72% of US adults said they were very concerned about food-related inflation.
To make matters worse, wage growth has consistently trailed inflation. Real wages, or income adjusted for inflation, fell 3% in September year-over-year.
A recent poll commissioned by Bankrate showed just one-third of working Americans reported their income was keeping pace with higher expenses related to inflation.
“The impact of inflation on household budgets continues to compound,” said Greg McBride, chief financial analyst at Bankrate. “Your raise may have come in the first couple months of 2022 but your expenses have continued to rise month in, month out, ever since.”
CNBC was first to report on Moody’s updated calculations.