All items on the U.S. Consumer Price Index have increased an average of 8.6% over the past 12 months, according to a recent news release from the U.S. Bureau of Labor Statistics.
You may be curious to know how these price increases will play out over the long term.
Are Prices Going To Go Back Down?
In a recent podcast, money expert Clark Howard was asked whether he thought prices would ever go down to where they were before the COVID-19 pandemic hit.
The listener who posed the question mentioned that the “temporary” price hikes on goods and services rarely seem to revert back to their previous levels.
Clark, quoting how economists describe it, says that the listener is correct in that “prices go up like a rocket and come back down like a feather.”
Clark says market forces often are the thing that dictates prices.
“If I own a business and I’ve been able to push prices up, I’m not being evil when I’m like, ‘Hey, I’m making more money now. I’m going to keep these prices,’” he says.
Clark adds that competition in the marketplace will eventually help reduce prices for some things, but he says that even those drops will take some time.
“What does happen is that prices accelerate really quickly, but the decline happens very slowly. Are we going back to where prices were pre-COVID? In most sectors of the economy, the answer is no.”
So what can we do to counter some of the sting associated with higher prices? Here are several money moves to make right now.
4 Money Moves To Make To Fight Inflation
Save on Your Energy Bill
Put some strategy into how you manage the temperature in your home. Is your thermostat set too low? If so, you could be burning money. Here's the ideal setting for summer.
Also, you can save a bundle by lowering the temperature of your water heater.
"Although some manufacturers set water heater thermostats at 140º, most households usually only require them to be set at 120º," says the Department of Energy website. "Set too high, or at 140º, your water heater can waste anywhere from $36 to $61 annually in standby heat losses."
Keep Food Costs in Check
One way to keep what you pay for food in check is to know about "shrinkflation."Clark has spoken about the phenomenon before, where prices go up and product sizes shrink.
“They typically keep the package the same size, but they reduce the amount of contents in the package,” he says.
To counteract shrinkflation, use unit pricing when trying to determine what you’re paying for groceries quantity-wise. “Unit pricing is your friend to combat shrinkflation,” Clark says.
Take a Look at Your Subscriptions
Even when it comes to small expenses such as subscriptions, it’s a good idea to keep tabs on what you’re spending your money on. Are you paying for some subscriptions that you’re no longer using?
Platforms like Trim (read our review here) and Truebill (review) can aid you in getting a handle on your subscriptions by helping you negotiate bills with service providers when there are issues.
Create an Emergency Fund
If you don’t have one already, consider creating an emergency fund. A stash that has about six months’ worth of income in it can come in handy when you find yourself in a financial crunch.
Read Team Clark's complete emergency fund guide to learn more.
More Savings Resources From Clark.com:
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