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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.

By MSN Money Partner Jan 10, 2014 2:09PM

This post comes from Maryalene LaPonsie at partner site Money Talks News


Money Talks News on MSN MoneyThere'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.


Inflation © Nick Koudis, Getty ImagesUltimately, 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:

202Comments
Jan 10, 2014 2:39PM
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Wait to see what the inflation rate will be if they raise the minimum wage to $15. 
Jan 10, 2014 2:28PM
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There will be no inflation, just ask the government.


Jan 10, 2014 3:44PM
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"Many of life's necessities are going to cost you more in 2014."
That is hardly news. Problem is, inflation isn't being calculated properly, hasn't been for decades.

"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."

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.


Jan 10, 2014 3:54PM
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Government likes inflation because it allows it to default on debt payments - it repays borrowed money with less valuable money. Kind of like me loaning you $100, and you repaying me $95 adjusted for inflation. For the rest of us, inflation is the bogeyman that erodes our standard of living  and destroys wealth. 
Jan 10, 2014 3:13PM
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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.

Jan 17, 2014 2:20PM
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Then why in the HELL did we get just a 1.5% increase in social security payments this year??? All I can say is you young people better wake up and get ALL of the crooked politicians out of office in Washington. And I don't care if you are a republican, or democrat. It's time for Americans to take back our government and get people in office who will work for Americans and America. 
Jan 10, 2014 5:08PM
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So, what else is new? What year did prices go down. It goes up every year for one reason or another. Drought, floods. Oil prices, food prices, things have doubled in the last couple of years. Health care, medications, on and on.....Pretty soon not only luxuries will be out of reach for the average Joe, but necessities as well....
Jan 17, 2014 2:10PM
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MSN cracks me up. 6.5% increase for healthcare? MY monthly healthcare premium went up 104% The Government really likes to Fudge numbers, a great example is last month over 300,000+ workers left the job market, THEY STOPPED looking for work = they are STILL UNEMPLOYED but because there were 74,000 new jobs added last month the Feds say that the unemployment rate DROPPED from 7% to 6.7%  must be nice to live and work in a make believe world.
Jan 14, 2014 10:40AM
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Just ask the Federal Government and they will tell you there is no inflation.
Jan 17, 2014 2:00PM
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Just remember health insurance is now one of "life's necessities"  You must purchase it according to the government.  So even if you can't afford to eat you still have to have health insurance.
Jan 17, 2014 1:56PM
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Barry ..... get off the golf course and help me out!! My costs are going up and up and my taxes are going up and up and my income is going down and down and for most, there are no jobs at all. What happened to your "jobs agenda"  What happened to your great HealthCare plan .... my healthcare premiums just went up again??? WTF are you doing? Oh ... you have no idea what you're doing. I didn't think so!!!!
Jan 10, 2014 3:52PM
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Some posters refuse to accept what Henry Ford did a long time ago, for a economy to prosper, folks need to see a living wage in order to actually go out and buy products. That's what DisplayNameBelow has shown, it has a far broader effects as opposed to Uncle Ben and Crack-Dollars.

Henry Ford pretty much Doubled the average wage for the workers of his Day and the rest is History. We need more Henry Fords.

Jan 11, 2014 5:15PM
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Anybody else think it's ironic that this article was written by:  Maryalene LaPonsie. Pronounce her last name as you see it. 
Jan 17, 2014 1:55PM
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Well Thank goodness for stores like Aldi's and the Grocery outlet I can eat healthy and keep my food budget under control.  Don't go to many places anymore outside of work and the park (can't afford to) so gas is not a problem.  Would love to further my education even at 50 but refuse to go into debt for it especially since it will not get me anywhere with my current job.  I also consider myself blessed my employer pays my health insurance premiums so that is not a big issue but, I must say that I still live paycheck to paycheck (and I am very conservative) because the things not mentioned in this article are going up as well and there is something that is always costing more.
Jan 10, 2014 3:37PM
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If you research history, you get a pretty good clue of the spike ahead. There is a difference this time but YOU need to wake up. Hoarding won't help you because to-have isn't an offset for hyper-hiked living expenses. Game tokens, stocks, bonds, imported commodities all fail. In fact, there's better odds of you wiping out your reserves and getting stuck with immobile assets. Being Asset-Rich Cash-Poor in an inflationary period let's better-prepared people pick off your holdings for pennies. It's about CASH-FLOW. Wages from an employer aren't going to last. Shed your 20th Century idea of what you're entitled to and get back to basic supply, demand and the sub-economy. This whole false funding and thievery has destroyed America's integrity and the world's patience.  
Jan 17, 2014 2:05PM
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Complain all you want, people, but come election time most of you will be voting for Democrats and Republicans (as usual), and articles like this one will be plentiful for many decades to come.
Jan 11, 2014 11:13AM
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Those who have or can borrow some land should be growing lots of food.  Stop watching television and complaining about food prices and solve the issue yourself.
Jan 10, 2014 4:39PM
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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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