Inflation hit a 40-year high earlier this month, surging 7.5% year over year. Everything from movie tickets to housing is up more than economists had forecasted. But inflation is nothing new: Prices have been rising for the past decade. You think prices are high compared to a year ago? Check out how high they are compared to a decade ago.
In the decade leading up to the COVID-19 pandemic, inflation ran around 2% per year, says Claudia Sahm, director of Macroeconomic Research at the Jain Family Institute. That slow and steady rise in the price of goods and services was more palatable for consumers but worrisome for the Federal Reserve. Some economists argue that low inflation is a sign the economy isn’t dynamic or isn’t growing enough.
That’s clearly not the case today. Gross domestic product, a measure of the nation’s economic output, rose at a feverish 6.9 percent in the last three months of 2021, compared to the same period in 2020, and the unemployment rate sank to 4 percent in December 2021, down from 6.4 percent the previous year. The recent burst of inflation is grabbing headlines, but the effect of inflation is cumulative, and the increase in prices over the past decade is even more eye-opening. Back in 2012, older adults were paying a lot less for key goods and services.
The cost of medical goods and services has risen rapidly over the past decade, with consumers paying more for doctor visits, hospital stays, surgeries and supplies. Medical care is an important component of the Consumer Price Index (CPI), an economic data point that measures the price of a basket of goods and services on a monthly and yearly basis. It includes the prices associated with doctor visits, hospital stays, medicine, equipment and insurance. Compared to 2012, medical costs are up nearly 27%, according to the Bureau of Labor Statistics.
To put that in perspective, here’s what some key health care services cost 10 years ago and today.
|Insulin||$2,864 per year||$6,000 per year (2018)|
||$5,615 per year for single coverage; $15,745 for family||$7,739 per year for single coverage; $22,221 for family|
Gasoline at the pump
Anyone who has filled up their tank recently knows just how much gas has climbed over the past few months. The energy component of January’s CPI rose 27% year over year. Surprisingly, gasoline prices are about the same as they were a decade ago. Prices at the pump could rise as the Ukrainian crisis unfolds. Regardless, retail gasoline prices tend to increase during the spring and summer travel season as gas stations switch to the summer blend of gasoline, which tends to be pricier.
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Ask any city dweller or empty nester looking to move in the past year just how high home prices have surged. With the pandemic driving people out of cities in search of larger spaces, home prices have been climbing at a rapid rate. Add a surge in the cost of building supplies and a shortage of construction workers, and countless people have been paying a lot to purchase a home. Even worse, many would-be buyers have been shut out of the market altogether.
But it’s not just the past 12 months that have seen housing prices rise. They have steadily increased over the previous decade. Consider this: In February 2012, the median price (meaning half were more, half were less) for a home was $239,900, and the average price was $274,000. As of the end of 2021, the median price had jumped to $377,700, and the average price has increased to $457,300.
Rent, too, has gone up over the past decade. In 2012, fair market rent for a two-bedroom apartment was $1,059 in California, $905 in New York, $630 in Georgia and $1,506 in Washington, D.C. Fast-forward to 2022, and those figures are $1,533 in California, $1,138 in New York, $853 in Georgia and $1,785 in Washington, D.C.
Whether you’re dining out, seeing a live show or going to the movies, chances are you’re paying more for fun than a year ago, let alone 10 years ago. The cost of entertainment has been rising, particularly in the past 12 months, thanks to pent-up demand brought on by the pandemic. But the increases extend beyond the most recent price hikes. Consider the following changes since 2012.
|Movie tickets||Average price $7.96 per ticket||Average price $9.16 per ticket (2019)|
|Valentine’s Day gifts & experiences||$126.03||$175.41|
|Netflix subscription||$7.99 per month||$15.49 per month|
|Super Bowl ticket
||Average price $1,200||Average price over $8,000|
Inflation is a constant worry, especially for anyone living on a fixed income. Over the past 50 years, the Consumer Price Index has averaged a 3.9 percent 12-month increase. In other words, to equal the buying power of $100 in 1972, you’d need $684 today. To equal the buying power of $100 in 2012, you’d need $124 today.
Donna Fuscaldo is a contributing writer and editor focusing on personal finance and health. She has spent over two decades writing and covering news for several national publications including the Wall Street Journal, Forbes, Investopedia and HerMoney.