The September inflation report confirms it: Crazy high inflation looks to be on its way out. In August 2024, prices rose a modest 2.5% relative to the prior year, according to the latest data from the Bureau of Labor Statistics.
Prior to July, inflation had not dipped below 3% for more than three years, peaking as high as 9.1% in 2022. In that context, 2.5% inflation is great news — if only because it helped convince the Fed to lower interest rates by half a percentage point. However, the aggregate price growth includes many moving parts, from the cost of eggs to the cost of men’s clothes. Dive into the details, and the inflation picture looks less rosy than the number implies.
The good news is, there are several price changes we can celebrate:
- Gas is cheaper by about 10%.
- The price of women’s dresses dropped by 4.3%, and women’s shoes dipped by 2.4%.
- Toys are about 3.2% less expensive, just in time for the holidays. You might start your holiday shopping now.
- Coffee deflated 2.1%.
Unfortunately, those declines are coupled with large-to-moderate increases in various categories, and some are probably already squeezing your budget.
These essentials are more expensive
Notable price increases in the August inflation report are:
- Eggs are up 28%.
- Car insurance premiums have risen 16.5%.
- Checking account and related banking services cost 8.9% more.
- Veterinary services are 7.6% pricier.
- Rent is up 5%.
This list is a sliver of the items that have gotten more expensive in the past year. Read on for strategies to address each one so you can make the most of your household budget going forward.
Note that the inflation data also reports price increases on services that are harder to address, such as at-home elderly care and childcare. If these affect you, it’s even more important to limit the impact of higher prices on things you can manage, such as eggs and car insurance.
Practical tips to manage price increases
Control the impact of high inflation on eggs, car insurance, banking services, veterinarians, and rent with these savings hacks.
Eggs
A dozen eggs in Santa Fe, New Mexico costs $3.62 for the generic brand and $4.98 for Eggland’s Best. Backing out the reported 28% price increase, we can estimate that eggs cost $2.89 to $3.89 a year ago.
Depending on how many eggs you buy, you may be spending an extra buck or two monthly. It is a small dollar impact, but one that can add up over time. Two dollars monthly is $24 annually and $240 each decade.
Two strategies can help you recoup dollars lost to egg inflation. One, switch from premium eggs to generic ones. And two, learn how to substitute other ingredients for eggs.
Swapping in applesauce for eggs in baked goods, for example, is a substitution that saves money and may provide health benefits. The substitution ratio is ¼ cup applesauce to one egg. Based on local prices, ¼ cup applesauce costs about half the price of a single egg. For more substitution ideas, see my article on Blogchef: How to substitute eggs.
Car insurance
A double-digit increase in your car insurance premiums is a larger, more pressing problem than egg inflation. Forbes Advisor says the average cost of car insurance in the U.S. is $2,026 annually. If that figure includes a 16.5% increase in the last year, the average driver is paying $287 more.
Rod Griffin, senior director of consumer education and advocacy for credit agency Experian shares these tips for managing higher car insurance premiums:
- Shop for cheaper insurance rates annually. Requesting free rate quotes from the Experian Insurance Marketplace or a similar service is an efficient way to comparison shop. Experian members can collect rates from up to 40 providers at once.
- Ask your provider for tips to lower your rates. You might qualify for a discount easily by, say, taking a driver safety course. Or it might make sense to raise your deductible for lower rates, assuming you have an emergency fund with a reasonable balance.
- Pay your bills on time. Some insurance providers check your credit history. For those providers, good credit supports lower rates.
- Bundle. Try consolidating your auto insurance and renters or homeowners insurance with one provider. Bundling can earn a sizable discount across both policies.
Griffin also warns not to take extreme measures for lower rates, such as canceling or reducing your coverage. You could analyze your coverage needs, however, and reduce it to avoid paying for more coverage than you need.
Banking
Banking fees are on the rise, too. Pay attention to your statements to avoid getting hit with new charges or increased maintenance fees.
If your bank is charging more, consider moving to an account with no maintenance fees and minimal activity requirements. Try these banks for free checking:
- U.S. Bank
- Discover
- Capital One
- Alliant Credit Union
While you’re reassessing your checking account provider, make sure your savings account has a competitive rate. These banks have competitive, high-yield savings accounts:
- EverBank
- Capital One
- Western Alliance Bank
- Barclays
When you switch banks, remember to close the old accounts after withdrawing the funds. If you don’t, the bank may keep charging the maintenance fees and put your account in the red. From experience, I’ll confirm that Citibank does not handle this situation well. The bank will transmit threatening notices to collect a few bucks and then send you to collections — even if the overdraft happened because the bank converted your free account to a paid one. Other banks may follow a similar policy.
Veterinary services
Sadly, veterinary emergencies are part of the pet ownership experience. If you don’t have a solid emergency fund balance or ample room on your credit card, investigate pet insurance. It may not save a ton in aggregate, but it should help with budgeting. Instead of getting a giant, unexpected vet bill, you will pay ongoing monthly premiums and see smaller unexpected vet bills. This comes in handy when Fido eats a pair of socks or has an unexpected allergic reaction.
Rent
Rent increases are hard to manage for two reasons. One, you probably like where you live and don’t want to move. And two, rent is often one of your largest monthly expenses. RentCafe says the average rent in the U.S. is $1,739 for a 900 sq. ft. place. If that’s up 5%, then last year’s average was $83 cheaper.
Try these strategies to keep your rent costs in check:
- Negotiate with your landlord. Offer to sign a longer lease or mow the lawn for a lower rate.
- Consider taking on a roommate if you can do it without violating your lease.
- Negotiate with your roommate. If you already have a roommate, offer to do housework or other chores for a lower share of the rent.
- Downsize or relocate. Research your options for moving once your lease is up.
If those options don’t work for you, look for savings elsewhere in your budget. You could cancel a streaming service, optimize your thermostat, or cut back on dining out, for example.
Higher prices here to stay
Inflation has moderated, but the higher prices generally are here to stay. While some things might get cheaper from one year to the next, the long-term trend for prices is up.
A two-pronged approach is the most sustainable way to manage rising prices over the long term. First, learn how to set a budget and live within it. And second, take steps to increase your income over time. The latter can involve investing, a side hustle, career training, or all three. Master those two steps and you can handle inflation plus any other financial challenge that comes your way.