Protect your expenses against inflation by avoiding these purchases
If you are suffering from post-pandemic sticker shock, you are not alone.
From gasoline and groceries to computers and clothing, everyday items are suddenly more expensive.
As the country recovers from the coronavirus outbreak and Americans put their stimulus checks and stashed money to work, some of these higher costs are simply the price consumers have to pay for an economic rebound. . (In other words, as the economy recovers, so will inflation.)
In other cases, supply chain setbacks have strained certain products, which also pushes up prices, but only temporarily.
Learn more about Personal Finance:
Prices Are Going Up – Here’s What Inflation Means For You
Fight inflation with a reverse mortgage
Inflation worries? Consider this investment
“It’s kind of like the mainstream version of musical chairs; there’s a bit of a rush for a limited supply of things,” said Mark Hamrick, senior economic analyst at Bankrate.com.
But not everything will always cost more, Hamrick said. And, if you’re considering a major purchase, it may pay off to wait for it.
Here are some examples:
Anyone planning to renovate their bathroom or kitchen will see significantly higher prices for raw materials.
Strong demand for home improvements coupled with supply chain slowdowns have driven some building materials, including wood, steel, gypsum and copper, to record highs this year.
A wide range of residential building materials increased 12.4% from the previous 12 months, according to the producer price index.
As a result, nearly half of all builders say they add indexation clauses to their selling prices due to rising material costs, according to a recent survey by the National Association of Home Builders.
“This is an unusual time created by the pandemic,” said Jack Kleinhenz, chief economist for the National Retail Federation. “I think people agree that we should wait a bit until things get better.”
But if you’re planning to get away from it all instead of redoing your home, you’re out of luck.
A sudden surge in the urge to travel after the pandemic also makes vacations more expensive.
Domestic air fares are up 9% since April 1 while international fares are up 17%, according to a recent study by Bernstein. And an increase in bookings pushes up prices even higher.
Hotel rates are also higher and have even exceeded pre-pandemic prices in some popular destinations, according to travel booking technology company Koddi.
Consumers with vouchers from last year’s canceled plans could take a break if they can use those credits.
“Many of us probably have value stored in services that we did not take advantage of during the pandemic,” Hamrick said. “At the very least, it’s worth asking.”
Although, in this case, act as early as possible to mark a reservation before flights and hotels are full for the summer – or worse, those vouchers expire.
Those planning to hit the road now that pandemic restrictions have been lifted can stall at the dealership.
Strong consumer demand along with a shortage of manufacturing microchips – key parts needed to run automobiles today – have reduced inventory of new cars at dealerships across the country. And the used car market is hardly better.
New cars cost an average of around $ 40,000 in April, according to Kelley Blue Book, up about 2.2% from a year ago. At the same time, the typical cost of a used car is now around $ 23,000, according to Edmunds.
“New vehicles – especially new trucks and SUVs – are basically the 2021 equivalent of toilet paper and hand sanitizer a year ago,” Jessica Caldwell, executive director of Edmunds, said in a statement.
However, the chip shortage is only expected to impact production until late summer or early fall, and prices typically drop towards the end of the year and into January, when sellers are looking to unload models from last year.
“Most of these price increases are temporary, so think carefully about whether it’s worth dipping into your savings and paying a premium,” said Anand Talwar, Head of Deposits and Strategy at consumption at Ally Bank.
“Instead, wait for stocks to rebuild and prices to drop,” he advised.
If you have to buy something that suddenly costs more, any additional savings will save you from having to rely on credit cards or other types of high interest debt.
“If the pandemic has taught us anything, it’s that your emergency fund isn’t a good thing to have, it’s a need to have,” Talwar said.
To get there, consider setting up an automated deposit in your fund for rainy days, Talwar advised.
“You will build and maintain your financial leeway and prevent the hard-earned savings of last year from coming out of the door to reopen.
Subscribe to CNBC on YouTube.