The frightening cost of living in the U.S: a Price Index Review

With food and energy prices increasing exponentially, it comes as no surprise that 67% of Americans are worried about the cost of living

As inflation continues to rise across the globe, people in the United States are becoming increasingly worried about the cost of living.

What does cost of living mean?

The phrase ‘cost of living’ is constantly cropping up in the media, but what does it actually mean?

The term cost of living refers to all the expenses a person must pay out in order to survive. These costs include:

• Food
• Housing
• Clothing
• Transportation
• Healthcare

Of course, these living costs differ massively between states so it is important to look at cost of living indexes to help understand and clarify these differences.

In 2020, the average yearly spending on all consumer units was $61,334. American households spent $7,317 on food, $9,826 on transport, $2,838 on housing-related expenses, $5,177 on healthcare and $2,912 on entertainment. In July 2022, the index for all goods, excluding food and energy, rose by 5.9%.

In July 2022, the index for all goods, excluding food and energy, rose by 5.9%

Food has experienced the biggest price increase since 1979

Fast forward to May 2022, the food index jumped by 1.2% following a rise of 0.9% the month before. And most recently, as of July of this year (2022), we saw the food index figure reach 10.9%.

In May 2022 the home food index rose by 1.4%, in addition to six consecutive months worth of increases of at least 1.0%.

Shockingly, the home food index has experienced its most significant 12-month growth since April 1979, an increase of 11.9% over the previous year.

• Eggs have gone up by 32.2%
• Meats, poultry and fish prices have risen by 14.2%
• Fruits and vegetables have increased by 8.2%

Energy prices have increased exponentially

From July 2021 to July 2022, the energy index reached 32.9%. Over the same period, the fuel index increased by 48.7% and the fuel oil index rose by an incredible 106.7%.

Fuel oil index rose by an 106.7%

The electricity index increased by 12.0% which is the biggest jump during a 12-month period since August 2006.

The natural gas index also rose by 30.2% during the last year which is the biggest rise since July 2008.

Therefore it comes as no surprise that the airline ticket price index has also experienced a 37.8% increase.

Mississippi is the cheapest state in America

Mississippi, with an index of 83.1, has the current lowest cost of living in the United States.

In other words, it is 17% less expensive to live in Mississippi than in any other state. Oklahoma comes second place with an index of 84.8.

It’s 17% less expensive to live in Mississippi than in any other state

Hawaii is the most expensive state in the U.S.

Hawaii is the most expensive state to live in the U.S. with a cost of living index at 192.7.  Hawaii’s cost of living is nearly twice as high as the national average in the U.S.

With a cost of living index of 158.8, the District of Columbia is the second-most costly state in the U.S.

Sources:

Consumer Expenditures – 2020

Consumer Price Index – July 2022

Cost of Living Statistics – Credit Summit