CHICAGO (CBS) — Inflation is at its highest point in 40 years, reaching 9.1 percent for the year in June, which is the highest since 1981.
The Consumer Price Index reports that the price of gasoline has skyrocketed nearly 60 percent over the past year, and of course it’s far from the only commodity affected.
Meanwhile, a market analyst told CBS 2’s Jackie Kostek that he thinks the cost of living right now is worse than the 9.1 number suggests.
“Less than six months ago, we were paying $13 and change for a carton of eggs,” he said. Lexington Betty Smoke House owner Dominique Leach, “Now, I’m paying $33 for it.”
Leach says food isn’t the only aspect of his business affected by inflation.
“We’re dealing with higher costs for food, labor, rent, gasoline and cooking gas,” Leachs said.
All of this is causing big problems for consumers.
“That definitely reflects people’s pain and inability to keep up,” said Jim Iuorio, CEO of TJM Institutional Services.
Iuorio, a broker, trader and market analyst, says red-hot inflation means the average American has effectively taken a pay cut. And while reports suggest that next year could bring the biggest pay rise in more than a decade at around 4 percent, Iuorio says that to keep up with inflation, that increase would have to be much more significant.
“I think there could be a 12 percent year-over-year wage increase, and it wouldn’t have done anything. Prices have gone up at least that much,” Iuorio said. “So I think you have to have more than that to really be better in this current environment.”
Iuorio believes that the consumer price index is actually understating current inflation.
The CPI reports that food increased 10.4 percent year over year in June. Iuorio estimates restaurant costs have risen 23 to 24 percent, something Leach can attest to.
She says she’s done her best not to pass on rising costs to her customers, and isn’t resorting to so-called “reduction inflation” tactics: serving customers less food for the same price. But still, she says it’s a challenge.
“We do our best to adapt and be flexible just so the client doesn’t see the difficulties on their end,” Iuorio said.
Leach says, realistically, he doesn’t want to put too much extra cost on his clients because that may turn some off. She said a customer wrote her a negative review recently after she raised the cost of the brisket by $1, something that shows how much of a balancing act it must be for business owners right now.
Also, while it may be tempting given the difficulties that have come with the current economic climate, financial experts recommend avoiding payday loans: short-term, high-interest loans that are usually due on your next payday.
Such loans come with a “fast cash” option, but with an average interest rate of 400 percent, fast cash can send you into a dangerous spiral of debt.
Experts say that payday loans should be your last option, and even personal loans are a better decision.