Remember when a can of soda cost a nickel? And candy bars were just a dime? Those days are long gone, as inflation over time has raised the price of just about everything. In the past, what your clients earned through wage gains or from their investments generally outpaced the rate of inflation. That difference, in the long term, has helped raise the overall standard of living of many people. Today’s inflation rates create a very different reality for your clients—one that is potentially quite frightening.
The most widely used measure of inflation is the Consumer Price Index (CPI). It is used to measure the changes in prices of all goods and services purchased for consumption by households. It is also an important measure of the overall health of the economy. Over the past 12 months, the CPI increased 2.9 percent, according to the Bureau of Labor Statistics. But does that paint the whole picture? Would you say the impact to your clients’ budget has been only 2.9 percent in the last year? Not likely.
The CPI number has, in the last few years, been suppressed by the decreasing cost of some non-essential but useful items, like televisions and computers. The things we have to buy—life’s essentials—are skyrocketing. In the last 12 months, the price of beef is up 11.5 percent. Milk is up 9.2 percent. Gas? Up almost 10 percent. And the prices for college and health care have routinely outpaced that of general inflation for a decade or more.
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