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Inflation is one of the most important economic metrics to understand when putting together a full understanding of the state of the American and global economies. Inflation describes how much average prices rise over a one-year period, so it illustrates a decrease in the value of the dollar over time. Here’s a December 2022 inflation update to keep you informed about how things are going.
Most recent inflation data
The current annual U.S. inflation rate for the period ending in November 2022 is 7.1%, down from 7.7% where it was in October. This means that, on average, prices through the holidays are roughly 7% higher than they were last year. Therefore, a salary of $100,000 has the purchasing power that a salary of $93,000 had last year.
Consumer price index
The consumer price index (CPI) is a measure of the average rise over time in the cost of basic goods and services for the average consumer. This makes it an important metric that can help show how inflation is realistically affecting the lives of many Americans. The CPI for November 2022 was 297.711.
The CPI is calculated based on baseline prices for goods and services, which were calculated from 1982 to 1984. The CPI from this year and last year can then be used together to calculate the inflation rate over the last year.
What products have been most affected by inflation?
Inflation rates are typically computed as an average across different types of goods and services, but inflation doesn’t necessarily affect every category of product the same. For example, the goods and services that are typically affected by inflation more than anything else are in the food and energy sectors.
This year, the average inflation rate for food was 10.6%. This can be broken down into a 12% raise for food from grocery stores to prepare at home and an 8.5% raise for food from restaurants and other places to eat away from home. The average inflation rate for energy this year was even higher at 13.1%. This can be broken down into a 12.2% raise in the cost of energy commodities and a 14.2% raise in the cost of energy services.
Other economic indicators
As always, it’s important to take other economic indicators into consideration when trying to understand the health of the American and global economies. One important indicator is the unemployment rate, as being without a job is even more painful financially for an individual than being struck by inflation. As of November 2022, the U.S. civilian unemployment rate is 3.7%. With slight increases and decreases, this rate has stayed roughly constant over the course of 2022.
Unemployment rates skyrocketed during the pandemic due to COVID-19 layoffs, reaching as high as 14%. Although inflation rates are high right now, the unemployment rate alone is enough to show that some level of economic healing continues to happen after the pandemic.