Inflation squeezes Americans as 61% say they live paycheck to paycheck
More than six in 10 Americans said they are living paycheck to paycheck as the rate of price increases remains stubbornly high despite the Fed Reserve’s battle to tame inflation, according to a study.
The survey by LendingClub found that 61% of adults reported barely making ends meet in July — an increase from 59% compared to the same month last year.
The survey dovetails with newly released data from the federal government Thursday which showed that the Personal Consumption Expenditures index, a key inflation measure closely watched by the Fed, rose 0.2% from the previous month.
Core prices, which strip out the more volatile measurements of food and energy, have risen 4.2% from the previous year.
The report found that Americans were spending more to eat out at restaurants and go to live shows, as well as on toys, clothes and prescription drugs.
Ordering a dish that includes beef and veal was nearly 11% more expensive in July compared to the same period last year.
Drinking a beer at a bar or restaurant was nearly 4% more pricier last month compared to July of last year.
The price of clothing and footwear went up by more than 2.4% in July year-over-year, while clothing for kids jumped 5.4%.
Americans have also been spending more on medicine, according to the latest government data.
The cost of pharmaceuticals soared in July by 3.4%, while the price of prescription drugs rose 2.8%.
Americans have also been burdened with the rising cost of health care.
A trip to the dentist or dental hygienist cost 5.3% more last month than it did last July, according to the data.
The latest data come as the Fed weighs whether to again hike interest rates when it meets later this month.
The central bankers are widely expected to leave the rate in the current range of 5.25%-5.5% after increasing it 25 basis points in July.
Earlier this month, the chief economist at Moody’s Analystics reported that Americans are spending $709 more per month on everyday goods and services compared to just two years ago.
“The high inflation of the past 2+ years has done lots of economic damage,” Mark Zandi tweeted following the release of the Consumer Price Index — a closely-watched measure of inflation that tracks changes in the costs of everyday goods and services.
The CPI rose moderately, to 3.2% in July versus a year earlier.
While inflation has fallen off its four-decades high, it remains well above the Fed’s 2% target rate.
“Due to the high inflation, the typical household spent $202 more in a July than they did a year ago to buy the same goods and services. And they spent $709 more than they did 2 years ago,” Zandi added.
Americans are feeling the pinch at the pump as gas prices have climbed roughly 60 cents since the start of the year.
The national average price of a gallon of regular gasoline stood at $3.82 as of Thursday — 9 cents higher than a month ago and just 3 cents shy of last year’s average, according to the American Automobile Association.
At the start of the year, the average retail gas price stood at $3.33 — and hit $3.98 last week before slightly dipping.
Analysts predict that the upcoming hurricane season will likely disrupt production while oil producing countries such as Saudi Arabia have indicated that they will cut supply — causing gas prices to spike even further.
