In the United States, inflation is at an all-time high. This information probably doesn’t come as a surprise! During the summer of 2022, inflation reached 9.1%, the highest rate in four decades. In this blog post, we explore inflation, how it affects families, and how programs serving children and families might use this data.
What is inflation and the Consumer Price Index?
Defined by the U.S. Bureau of Labor Statistics (BLS), inflation is the overall general upward price movement of goods and services in an economy. The Consumer Price Index (CPI) is a program that produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. Indexes are used to adjust payments for items or services affected by increases in the cost of living.
What does inflation data tell us?
Inflation data tells us how costs for goods and services have changed over time. It is important to understand, because there are many impacts of inflation – for households and consumers, for example, the dollar doesn’t stretch as far and prices increase for everyday items such as food and utilities.
Taking a look at recent data, the BLS reports that the Consumer Price Index for All Urban Consumers (CPI-U) rose 6.5% nationwide from December 2021 to December 2022. For some selected items, however, the increases are far more significant. For instance, food costs increased 10.5%, and the CPI-CU for fuel increased 41.5%.
The BLS also provides regional CPI-U information in its Data Tools. These nuances are important to understand, as regional economies influence how inflation impacts local communities. An example from the Philadelphia-Camden-Wilmington area shows the CPI-U rose 6.4% from December 2021 to December 2022 after a 0.4% decline, the first decline since April 2020. And costs for food increased 11.1%, greater than the nationwide rate.
How does inflation impact families, and low-income households in particular?
An Expert Q&A from UC Davis does a great job of answering this question. One of the primary ways that inflation impacts families is that they need to spend more money on typical household expenses. The rise in inflation occurring over the past two years has been particularly high for items such as food and fuel, as noted above. It can be difficult for families of any income-level to absorb these changes. However, because low-income households spend a greater portion of their income on basic necessities (e.g., food, gasoline, heating), they tend to be more deeply impacted by rising inflation. There may be a greater need for resources such as home energy support and food assistance (e.g., WIC, SNAP).
How can programs use data on inflation to inform services for children and families?
Reviewing inflation data is one key to understanding what is happening in communities and how families may be impacted locally. In coordination with other data and information, inflation data can help programs understand what resources and supports families may need to weather rising prices. For Head Start/Early Head Start programs, or other agencies required to conduct a community needs assessment, inflation data will also provide a lens through which to evaluate changing needs and demand for resources in the community.
Foundations for Families offers an array of Consulting Services to support programs, including comprehensive community assessment and data updates. If your program is in need of assistance, please be in touch. We would be glad to learn more about your program.
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