CHICAGO (CBS) — Inflation is at a 40-year high — in June it hit 9.1 percent for the year, the highest since 1981.
The Consumer Price Index reports that the price of gas has skyrocketed by almost 60 percent over the last year – and of course it is far from the only commodity affected.
Meanwhile, a market analyst told CBS 2’s Jackie Kostek that he believes the cost of living is actually worse than that 9.1 figure suggests right now.
“Less than six months ago we paid $13 and change for a case of eggs,” he said Lexington Betty Smokehouse Owner Dominique Leach: “Now I pay $33 for it.”
Leach says groceries aren’t the only aspect of her business that’s been affected by inflation.
“We’re dealing with higher costs for groceries, labor, rent, gasoline and cooking gas,” Leachs said.
All of this causes great problems for consumers.
“It definitely reflects the pain and the people who can’t keep up with it,” said Jim Iuorio, managing director of TJM Institutional Services.
Iuorio — a broker, trader, and market analyst — says blistering inflation means the average American is effectively taking a pay cut. And while reports suggest that next year could see the largest wage increase in more than a decade, at around 4 percent, Iuorio said that increase would need to be far more significant to keep up with inflation.
“I think you could have a 12 percent pay rise year after year and it wouldn’t have done anything. Prices have gone up at least that much,” Iuorio said. “So I think you have to have something more than that to actually do better in this current environment.”
Iuorio believes that the CPI actually underestimates current inflation.
The CPI reports that groceries rose 10.4 percent year-on-year in June. Iuorio estimates restaurant costs are up about 23 to 24 percent — something Leach can attest to.
She says she’s done her best not to pass on the rising costs to her customers, and she doesn’t resort to so-called “shrinkflation” tactics — serving customers fewer meals for the same price. But still, she says it’s a challenge.
“We do our best to adapt and be flexible so that the customer doesn’t see the difficulties on their side,” Iuorio said.
Leach realistically says she doesn’t want to impose too many additional costs on her customers because that might put some off. She said a customer recently wrote her a negative review after she increased the cost of brisket by $1 – something that shows just how much of a balancing act this must be for business owners these days.
While it may be tempting given the difficulties that accompany the current economy, financial experts say you should avoid payday loans — short-term, high-interest loans that typically mature on your next payday.
Such loans boast a “cash fast” option, but with an average interest rate of 400 percent, fast cash can send you into a dangerous spiral of debt.
Experts say payday loans should be your very last option, and even personal loans are a better choice.