As reported by CNBC, the current high-inflationary environment is costing the average American household an additional $327 per month. That amount is about $30 more than last month’s estimate of $296 per month.
There is, however, growing confidence that March’s inflation reading could have been the peak.
“Our forecast is that March was the peak for year-over-year growth in inflation and that it will gradually moderate,” wrote Moody’s Analytics’ senior director of research, Ryan Sweet, who conducted the analysis.
The eye-opening analysis comes on the heels of another estimate released by Bloomberg economists. They contend that rising inflation will cost the typical American household an extra $5,200 this year—broken down, that comes out to $433 in extra monthly costs.
“Accelerated depletion of savings will increase the urgency for those staying on the sidelines to join the labor force, and the resulting increase in labor supply will likely dampen wage growth,” the economists wrote.
Worst Yet to Come?
While some Americans might feel that the worst of inflation is behind them, some of the nation’s top economists are contending otherwise.
According to Bankrate’s First-Quarter Economic Indicator poll, 53 percent of experts believe that inflation will likely rise higher than expected over the next twelve to eighteen months. Meanwhile, only 21 percent expect inflation to climb at a slower pace, and 26 percent say it should evolve as expected.
Moreover, in a separate Bankrate poll, 93 percent of consumers have noticed higher prices on the items that they buy and nearly 75 percent have seen their budgets contract.
“Already established historically high inflation acts as a tax on households,” Mark Hamrick, Bankrate’s senior economic analyst and Washington bureau chief, noted in a statement. “Aside from the obvious geopolitical implications, Russia’s invasion of Ukraine has injected significant downside risks for the economy and upside risks for inflation, with so-called stagflation and recession as possible outcomes. This at a time when consumers are already indicating that sentiment has been adversely affected by some of the worst inflation many have seen in their lifetimes.”
Retail Spending Heads Higher
Despite inflation pressuring the budgets of many households, it appears that Americans kept on spending last month.
According to the Commerce Department, retail spending climbed by 0.5 percent in March compared to the previous month. The largest gain in sales came at gas stations, which witnessed a nearly 9 percent increase in sales as gas prices surged more than 18 percent during the period. Also, general merchandise stores saw business up 5.4 percent, clothing stores 2.6 percent, and restaurants 1 percent.
“Overall consumption is likely to have received a boost last month from a further solid rise in services consumption,” Andrew Hunter, senior U.S. economist at Capital Economics, wrote in a research note, per CBS News.
“While that would still leave growth over the first-quarter as a whole at close to 3.5 percent annualized, it provides a weak starting point for the second quarter,” he continued.
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.