Cost Of Living Increase in 2019
It’s been 10 years since the crash of market. This time of the year in 2009, we observed a massive number of foreclosures, layoffs, and steep drop of interest rate. Businesses are forced to file bankruptcy, many people lost their jobs during the last recession. Since then, the housing market has been recovering and growing again. In January 2019, the U.S. employers added 304,00 jobs to the market [1]. That’s 100 consecutive-month that the number of job is increased. The economy is seemingly doing well. The people may wonder what is the cost of living increase in 2019?
Inflation Rate
The following is a chart of CPI, consumer price index, for all items in U.S. city average between January 2008 and December 2018 (1982-84=100) [2]. As you can see, it is steady upward trend. The year-over-year CPI growth from December 2017 to December 2018 is 1.91%.
CPI all items in U.S. city average, all urban consumers, not seasonally adjusted [2]
December year-over-year CPI growth [2]
| Year | CPI Growth Y-o-Y |
Year | CPI Growth Y-o-Y |
| 08 – 09 | 2.72% | 13 – 14 | 0.76% |
| 09 – 10 | 1.50% | 14 – 15 | 0.73% |
| 10 – 11 | 2.96% | 15 – 16 | 2.07% |
| 11 – 12 | 1.74% | 16 – 17 | 2.11% |
| 12 – 13 | 1.50% | 17 – 18 | 1.91% |
| 13 – 14 | 0.76% | Avg. | 1.80% |
By looking at these data, overall, The cost of living increase in 2019 is expected grow somewhere 1.5% to 2% range. One thing you need to keep in mind is that the Federal Reserve FOMC (Federal Open Market Committee) announced on January 30th that it is going to take easy on the rate hike for the next term. The current federal funds rate are between 2.25 percent and 2.5 percent. The Federal Reserve will be likely to hold the current rate for the next quarter and possibly for the rest of the year. It also announced that the U.S. economy is expected to grow but not as rapid as the one in 2018 [4]. This can be some metric for the cost of living increase in 2019.
Inflation Rate by Item
Let’s look at the inflation rate of past 10 years for selected items. The following graphs is the CPI growth for food, housing, heating fuel, and electricity.
CPI Growth January 2008 to December 2018 Food & Housing [2]
Other than heating fuel, the it’s a gradual increase of somewhere between 1% to 4% annually.
10-Year December Year-over-Year CPI growth for Food & Housing [2]
| Dec y-o-y | food & beverage | shelter | fuel oil and other fuels | electricity |
| 08 – 09 | -0.36% | 0.31% | 2.51% | -0.51% |
| 09 -10 | 1.48% | 0.45% | 13.47% | 0.71% |
| 10 – 11 | 4.45% | 1.91% | 14.25% | 2.15% |
| 11 – 12 | 1.77% | 2.20% | -1.45% | -0.47% |
| 12 – 13 | 1.10% | 2.54% | 2.89% | 3.21% |
| 13 – 14 | 3.27% | 2.90% | -13.74% | 3.15% |
| 14 – 15 | 0.77% | 3.21% | -23.24% | -1.22% |
| 15 – 16 | -0.13% | 3.62% | 7.91% | 0.67% |
| 16 – 17 | 1.57% | 3.20% | 12.61% | 2.59% |
| 17 – 18 | 1.59% | 3.20% | 1.33% | 1.07% |
| Avg. | 1.55% | 2.35% | 1.65% | 1.14% |
Food and Beverage
The cost of food price is affected by weather, production supply, price of fuel / crude oil, and some other factors. The average annual growth of 1.55% (December year-over-year). The EIA estimates that the crude oil price is expected to hover somewhere around $50 to $60 for 2019 [5]. It’s pretty subtle range. Since the transportation cost is greatly influenced by the cost of fuel, this crude oil price is favorable for the food transportation throughout the year 2019.
Housing
The housing price is showing solid growth past few years. The December to December annual growth is above 3% Since 2014. One thing stands out is that the pending home sales index is declining [6] but the home sales price is on the steady growth [7]. This trend doesn’t show a sign of drastic slow down like the one in 2008. If you wonder about the rent growth of your city, click here to find out more. The rent growth of rental property varies based on the region. The the year-over-year growth range of 100 metro areas is between -1.2% to 4.0% according to Apartment List [8]. The median is 1.4% and the mean is 1.46%. Expect around 1 – 2.5% rent hike for 2019. But again, it really depends on where you live, please refer your metro area.
Other Items
The change of housing and food costs influence the most for the cost of living increase in 2019. The following chart shows some of major categories of expenses. As you can see, the college tuition is the champion and no sign of slow down. It’s 50% growth in past 10 years. The runner up is medical expenses and childcare costs. The 10-year-growth is more than 30%. The vehicles and apparels are almost zero or slightly above zero. The fuel, appliances, and furniture, are downward trend. The cost of gas is directly correlated to the price of crude oil and it’s understandable trend considering about the trend of crude oil price.
CPI Growth January 2008 to December 2018 Selected Items [2]
10 Year December Year-over-Year CPI growth for Selected Items [2]
| Dec y-o-y | apparel | medical care | college tuition and fees | child care and nursery school |
| 08 – 09 | 1.95% | 3.37% | 5.96% | 2.26% |
| 09 -10 | -1.08% | 3.28% | 4.06% | 3.73% |
| 10 – 11 | 4.57% | 3.49% | 6.02% | 2.21% |
| 11 – 12 | 1.77% | 3.21% | 4.03% | 2.67% |
| 12 – 13 | 0.64% | 2.01% | 3.90% | 2.16% |
| 13 – 14 | -1.99% | 2.96% | 3.43% | 2.24% |
| 14 – 15 | -0.93% | 2.58% | 3.53% | 4.06% |
| 15 – 16 | -0.13% | 4.07% | 2.33% | 2.88% |
| 16 – 17 | -1.65% | 1.78% | 2.10% | 1.75% |
| 17 – 18 | -0.07% | 2.01% | 2.75% | 1.91% |
| Avg. | 0.31% | 2.88% | 3.81% | 2.59% |
| Dec y-o-y | furniture and bedding | appliances | new and used motor vehicles | motor fuel |
| 08 – 09 | 0.00% | -2.63% | 5.48% | 50.69% |
| 09 -10 | -4.53% | -4.06% | 0.65% | 13.93% |
| 10 – 11 | 1.98% | 1.46% | 2.83% | 10.34% |
| 11 – 12 | -0.37% | 1.87% | -0.05% | 1.74% |
| 12 – 13 | -2.35% | -3.80% | 0.70% | -1.03% |
| 13 – 14 | -1.61% | -5.21% | -0.89% | -20.84% |
| 14 – 15 | -0.78% | -3.42% | 0.14% | -19.86% |
| 15 – 16 | -2.85% | -4.42% | -1.03% | 9.08% |
| 16 – 17 | -0.68% | -1.03% | -0.33% | 10.74% |
| 17 – 18 | 1.68% | 4.74% | 0.83% | -1.90% |
| Avg. | -0.95% | -1.65% | 0.83% | 5.29% |
Use above data to predict the cost of living increase in 2019. Plan your expenditure wisely.
References
1. U.S. Bureau of Labor Statistics
Databases, Tables & Calculators by Subject
Data extracted on: February 1, 2019 (5:25:56 PM)
Employment, Hours, and Earnings from the Current Employment Statistics survey (National)
2. U.S. Bureau of Labor Statistics
Databases, Tables & Calculators by Subject
CPI-All Urban Consumers (Current Series)
Data extracted on: February 1, 2019
All items in U.S. city average, all urban consumers, not seasonally adjusted
3. The Federal Reserve System
Federal Open Market Committee
2019 FOMC Meetings January 29-30
FOMC Meeting Statement
4. The Federal Reserve System
Federal Open Market Committee
2019 FOMC Meetings January 29-30
Transcript of Chairman Powell’s Press Conference January 30, 2019
5. U.S. Energy Information Administration
Short-Term Energy Outlook
Release Date: January 15, 2019
Crude Oil Prices
6. National Association of Realtors
Pending Home Sales January 30, 2019
7. Federal Housing Finance Agency
U.S. House Price Index Report – November 2018
8. Apartment List
February 2019 Apartment List National Rent Report
Related Reading
Cost of Living Increase 2022