Strategies to combat rising consumer prices
Monday, 4 March 2019
It's not your imagination: prices have been going up. Think of it as the downside of an up economy.
The strength of the economy, a tight labor market, and the impact of trade conflicts has prompted many large U.S. companies to start increasing prices.
Proctor and Gamble, the largest consumer products company in the country, has raised the price of Pampers diapers by four percent and bumped up the cost of Bounty, Charmin and Puffs brands by five percent. Hersey Co., Coca-Cola, and Kellogg Co. are following suit and hiking prices on many popular products.
Stagnant for years, wages have started to creep up. However, the rising cost of basics like food, housing, and transportation are negating those wage increases, leaving many Americans with a higher cost of living, but without a paycheck big enough to cover it.
If you're one of the millions of Americans feeling this financial squeeze, there are strategies to help you combat rising prices. Hopefully, these tips can help you get back in the black so you can avoid dipping into your savings or going into debt.
The cost of housing — owning and renting — has gone up steadily over the past few years, driven primarily by a shortage of affordable housing. And with the increase in housing costs consistently outpacing wage growth, paying for housing will remain a challenge for many Americans. How can you afford to purchase or rent a home, or reduce the cost of your current living situation? Here are a few ideas:
- Do your research. The cost of housing is based on many factors including location, school system, taxes and more. For example, in most cases, the better the school system, the higher the housing prices and property taxes. If you're single or don't have kids, it probably doesn't make sense to spend the money to pay for a school system you won't use. Doing your homework and understanding the cost of living in different areas — such as taxes, insurance and transportation costs — can help you save money in both the short and long term.
- Whether you're renting or buying, get your credit score in shape. This is important when it comes to getting a mortgage, but your credit rating can also affect how much you pay in rent, the amount of your deposit and even your utility costs.
- Get a roommate. Having someone pay half of your mortgage or rent each month can alleviate a lot of financial stress. It might sound like a dramatic step, but if you have the room, it could be a good step to saving money.
Food & consumer products
When the economy is strong, labor and material costs go up, and companies have to pay more to manufacture their products. In most cases, these costs are passed along to the consumer. Like Crest toothpaste? The price of a tube could be going up between five and 10 percent this year. But you still need toothpaste. So, what do you do?
- Shop online. It's easy to compare prices and get the best deal. Plus, prices are constantly changing online —much faster than in brick-and-mortar stores — giving you the opportunity to snatch up items when prices dip.
- Shop at food discount chains like Aldi. These stores might carry brands you're not familiar with, but they're cheaper and you just might like them.
- Buy store brands and generics. You might need to put brand loyalty on the back burner when trying to trim your grocery bill. Store-brand items are usually pretty comparable to brand-name products and can cost a lot less.
- Be loyal. Take advantage of a retailer's loyalty or rewards program. If you understand how to leverage the program's benefits, you can save money.
Housing costs typically take up the biggest chunk of American's monthly budgets. But, many personal financial experts list transportation as the second largest monthly expenditure. This amount includes the cost of your vehicle as well as insurance, fuel and maintenance. Here are some suggestions for trimming your monthly transportation costs:
- Shop around for best financing. Your monthly payment is the bulk of your monthly transportation expenses. Why not get the lowest payment you can for an auto loan? The best way to do this is to get a reasonable price, but also the lowest possible interest rate. Shop around for the best rate and fees. Again, a good credit rating will help you score the best deal.
- Shop around for auto insurance. There are a lot of factors that determine exactly how much auto insurance costs, but it can run into hundreds of dollars a month. What's more, auto insurance rates have risen the past few years, and are expected to continue to rise in 2019. If you have a good driving record and good credit, you can probably save on your insurance, if you shop around and compare prices.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
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