Inflation in 2014: How much more will you pay?
Many of life's necessities are going to cost you more in 2014. Here's how much some of the most important ones are expected to increase.
This post comes from Maryalene LaPonsie at partner site Money Talks News.
There's a reason McDonald's hamburgers sold for 15 cents in 1955 and are now $1-plus, depending on where you live: It's inflation.
Inflation is the economic principle that explains why everything costs more over time. Or, for a more depressing spin on inflation, it's the reason your money is worth less today than five years ago.
If you're wondering how much more you can expect to shell out this year for everything from basic living expenses to your kid's college tuition, we'll give you the lowdown on how much prices are expected to rise in 2014.
Inflation keeps prices on the rise
Inflation is one of those words we throw around a lot when talking about the economy, but if it's a hard concept to wrap your mind around, take heart. Entire books have been written on the subject, and we still feel confused.
Ultimately, inflation is the result of complex factors, including:
- Government policies.
- The job market.
- Supply and demand.
- Currency exchange rates.
- The national debt.
But unless you're planning to major in economics, let's forget all that for the moment.
For you, as an average citizen, the important thing to know about inflation is that it is going to make things more expensive in the coming year.
How much more expensive is up for speculation, but 42 forecasters surveyed by the Federal Reserve Bank of Philadelphia say core inflation should be about 2 percent in 2014.
In a nutshell, that means what cost you $100 in 2013 will cost you $102 in 2014. Not bad, right? Well, not until you realize that core inflation doesn't include things like food and energy.
All in all, it's good news
The bad news is that prices for food, tuition and health insurance will be going up, but the good news is that most of those increases won't be much over inflation or won't be nearly as large as they've been in recent years.
Here's what to expect:
- Food prices. According to the U.S. Department of Agriculture, increases in food costs should be on par with inflation, about 2.5 percent to 3.5 percent.
- Gas prices. It shouldn't cost you any more to fill up at the pump this year. The Energy Information Administration predicts that regular gas will average $3.43 a gallon during the next 12 months, which is roughly the same as 2012 and 2013.
- Tuition prices. College tuition rates continue their march onward and upward. The College Board says (.pdf file) the cost of in-state tuition at four-year public universities will likely go up 2.9 percent in 2014. That may be more than inflation, but it's also the smallest increase in 30 years. In fact, just a year ago, tuition hikes averaged 4.8 percent. In addition, one of the largest single-year increases recorded by the College Board happened in the 2009-2010 school year, when average in-state tuition rates at four-year public institutions jumped 9.3 percent.
- Health insurance rates. Finally, we come to health insurance rates. The Health Research Institute at PricewaterhouseCoopers says the rate of inflation in health care spending will slow this year to 6.5 percent. It said:
The trend is a key ingredient in setting insurance premiums. After accounting for likely changes in benefit design, such as higher deductibles, HRI projects a net growth rate of 4.5 percent in 2014.
However, PwC notes that premiums vary widely, depending on factors like location and the type of plan.
Says the Los Angeles Times, "According to a number of industry surveys, employers will see a lower-than-average jump in health benefit costs of roughly 5 percent in 2014, due largely to health care costs rising at a historically low rate."
More on Money Talks News:
Seeing as Real Wages and Benefits are stagnant are declining for over a decade, Real Inflation has been and will be much higher than what Corporate America and Government tells you.
Sorry. You are wrong MSN. I have been successfully brainwashed by Government. There is no inflation, it doesn't exist. it's a myth, a fantasy, a made up scenario where two worlds collide.
Please.... someone wake me from the madness.
Henry Ford pretty much Doubled the average wage for the workers of his Day and the rest is History. We need more Henry Fords.
Stagnant wages are protecting against hyper-inflation. Unless government policies, debt, etc. are controlled first, rising wages will exponentially increase inflation.
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