See how rising costs impact you and your family
Yes, inflation is at a 40-year high, but you might not be feeling its sharp bite. It all depends on where you spend your money.
The Consumer Price Index is a basket of thousands of goods and services. In March, it marked a nearly 8.5% jump from a year ago. Categories such as gasoline, food and housing are the biggest contributors to the increase.
To analyze inflation’s threat to your farm and family, calculate your personal inflation rate.
- Determine your monthly expenses for the following categories: food and beverages, housing, clothing, transportation, medical care, recreation, education, communication and other goods and services. Include big-ticket items you pay once or twice a year, such as home insurance.
- Subtract your monthly spending a year ago from your current monthly spending.
- Divide that sum by your monthly spending from a year ago.
For instance, if your spending last month was $4,500, and a year ago it was $4,250, the difference is $250. Divide $250 by $4,250 and you land at a personal inflation rate of 5.9%.
MINIMIZE INFLATION IMPACTS
Inflation is a growing risk for your farm and family. “It is also largely out of your control,” says Brent Gloy, economist at Agriculture Economic Insights. “What you can do is recognize prices are heading up and plan for it.”
This inflation calculation can be an eye opener about your family living expenses. If tracking your expenses is intimidating, start small, encourages Alex White, farm and financial management instructor at Virginia Tech University. For one month, track all personal expenses on paper or with an electronic tool.
Once you have current data, he says, you can see if you need to reduce expenses or set some financial goals.
You Are What You Spend
Some products and services have seen dramatic jumps in price. Luckily, a 13% jump in cracker prices isn’t felt as sharply as the nearly 40% increase in gas prices. Here are inflation levels for a few categories.
Read More
How to Anchor Your Farm’s Profits From Inflation’s Pull
John Phipps: The Inflation We Expect
3 Economic Forces to Watch that Will Impact Agriculture
Adios to the Ag Dollar: A Farmer’s Story on Inflation and Inputs
