Record Inflation: How NJ Residents Should Adjust Budgets

NEW JERSEY — The price of food, clothing and lodging continues to increase in New Jersey amid record-high inflation rates in the country. In fact, inflation hit a 40-year high in March, jumping 8.5 percent over the previous 12 months, according to a new Labor Department report released Tuesday.

The rise in the price of basic goods spells out uncertainty for New Jersey households already feeling the pinch of inflated costs for necessities.

Inflation has been steadily rising for months for a variety of reasons, ranging from a bottlenecked supply chain and increased consumer demand to volatility in global food and energy markets worsened by Russia’s war in Ukraine, The Associated Press reported.

Ryan Sweet, a senior economist with Moody Analytics, told CNBC in March that inflation costing Americans $296 more a month was “going to get worse before it gets better.”

Americans haven’t managed such high inflation since 1981, and the 1.2 percent increase in the consumer price index from February to March was the biggest month-to-month jump since 2005.

And with gas prices that have increased 48 percent over the past year and food costs up 10 percent, budgeting for inflation becomes evermore important.

Estimates vary on how much extra money New Jersey residents should build into their household budgets through the end of the year. Bloomberg News did the math, saying households should plan to spend $5,200 more this year, or $433 a month, for the same “consumption basket.”

For consumers in the Northeast, including in New Jersey, area prices skyrocketed up 7.3 percent from a year ago and 1.3 percent from last month, per the U.S. Bureau of Labor Statistics. The increase was largely due to higher prices for energy, up 11.2 percent, as gasoline prices rose 18.0 percent over the month; each were the highest increases since 2005, according to Regional Commissioner Alexandra Hall Bovee.

The agency’s breakdown of price increases over the past month is as follows:

• Food (at home): 0.9 percent
• Food (away from home): 0.4 percent
• Energy: 11.2 percent
• Lodging (away from home): 10.5 percent
• Shelter: 0.5 percent
• Apparel: 2.8 percent
• Medical Care: 0.7 percent

Alas, not all populations feel the same pain at the checkout counter and gas pump, or when they’re making out their rent checks.

Analyses by the Penn Wharton Budget Model and Wells Fargo showed low- and middle-income U.S. households are hurt the most by inflation. The Wells Fargo study, cited by CNBC, showed the middle class is being hit the most; and within that group, Hispanics and Latinos have the steepest jump in living costs.

There’s no way to know exactly how much prices will rise, though the Labor Department’s past consumer price index reports portend continued inflation.

One way to keep track of how much more you’re paying is through a Bureau of Labor Statistics inflation calculator. Say your monthly household budget was $4,982 in March 2021; a year later, you’d need $8,129.09 to pay the same bills.

“This is really harmful for people on fixed incomes,” Carol Ehlers, a human sciences specialist with the Iowa State University Extension and Outreach, said in a news release recommending the inflation calculator as an effective budget-building tool.

“Higher prices mean families need to be more strategic about their spending and find ways to stretch their income. Budgeting for periods of higher inflation challenges families to rethink the way they spend and determine which expenses they potentially can reduce or eliminate,” Ehlers said.

Analysts and others who spoke to CNBC offered some tips on keeping household budgets on track, including combining errands in one trip to save on gas, searching for apps and digital coupon sites, and canceling or renegotiating subscription services.

Also, experts said, it’s important to check the household budget weekly to see what costs are increasing the most and where budgets can be trimmed.