Cost of Living Increase 2022 Part 2

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On March 10th, 2022, the U.S. Bureau of Labor Statistics published that the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8 percent in February on a seasonally adjusted basis after rising 0.6 percent in January. The CPI for all items increased 7.9 percent year-over-year in February before seasonal adjustment. The rate of inflation is not showing any sign of slowing down and is expected to continue through 2022. The February 2022 12-month year-over-year increase is the largest since the period ending January 1982. In the previous episode, The cost of living increase 2022 for selected items. If you haven’t checked out part 1, please check out the previous episode The Cost of Living Increase 2022 Part 1.

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Cost of Living Increase in 2022 part 1

Cost of Furniture Increase

The cost of furniture is expected to see a steady increase in 2022. Since the summer of 2020, the upward Inflation has picked up its pace and recorded a high month-to-month CPI increase. Before the pandemic, the annual CPI increase of furniture from November 2018 to November 2019 is 2.23% and from November 2019 to November 2020 is 1.52% [2]. However, the CPI increase for furniture from November 2020 to November 2021 is 11.77% [2]. It is a rapid increase. The Nebraska Furniture Mart chairman Irv Blumkin indicated that the demand is better than that of 2019 [3]. The rapid price increase of furniture is supported by the strong demand in the market. Nebraska Furniture Mart is owned by Berkshire Hathaway and it’s one of Warren Buffett’s portfolios.

The furniture sales in April 2022 in the U.S. is $12.173 billion while the furniture sales for the same month in 2019 are $10.007 billion [4]. it’s roughly 20% higher than the pre-pandemic period. Also, the uptick in furniture sales could be influenced by the fact that the increase in existing and new home sales.

Period CPI furniture YoY change %
Nov-18 – Nov-19 2.23%
Nov-19 – Nov-20 1.52%
Nov-20 – Nov-21 11.77%
Cost of Living Increase Furniture 2018-2021
Cost of Living Increase Furniture Month to Month Change 2018-2021
Period U.S. Furniture and Home Furnishings
Annual Sales ($ billion)
2017 115.447
2018 119.169
2019 120.735
2020 112.647
2021 141.968

Cost of Appliances Increase

The cost of appliances is on the rise as well. In June 2020, the consumer price index for appliances started to take an upward trend and was persistent through 2021. The year-over-year change for CPI from November 2018 to 2019 is 0.02%, almost no change. The change for CPI from November 2019 to 2020 jumped to 5.96% and 4.92% from 2020 to 2021 for the same period. However, the demand for appliances might be leveling off this year.

Whirlpool, a home appliance manufacturer published that the revenue for the first quarter of 2022 is 14% higher than that of 2020 while the revenue for the first quarter of 2022 is down by 8.2% compared to the same period in 2021. The company is expecting revenue growth of as much as 3% this year.

Period CPI Appliances YoY change %
Nov-18 – Nov-19 0.02%
Nov-19 – Nov-20 5.96%
Nov-20 – Nov-21 4.92%

Electronics appliance sales 2018-2022
Period U.S. Electronics & Appliances
Annual Sales ($ billion)
2017 92,547
2018 94,371
2019 91,045
2020 75,365
2021 94,299
2022 90,882 (estimate)

Cost of New Vehicles Increase

One of the steepest rises in the cost of living expenses is the price of cars. The CPI increase from November 2018 to the same month in 2019 is -0.07%, almost flat. However, it jumped to 11.1% for the same time from 2020 to 2021. The largest spike in CPI increased in the summer of 2021. The month-to-month CPI increased by 1.97% in June 2021 and 1.72% in July 2021 for new vehicles. That’s roughly the annual rate of 23.64% and 20.64% respectively.

Period CPI New Vehicle YoY change %
Nov-18 – Nov-19 -0.07%
Nov-19 – Nov-20 1.62%
Nov-20 – Nov-21 11.11%

Medical Care Services Cost of Increase

The cost of medical care services experiences a moderate increase compared to other goods and services. The year-over-year CPI increase for medical care services increased by 5.14% from November 2018 to November 2019 [2]. The CPI increased by 3.21% for the same period from 2019 to 2020 and 2.07% from 2020 to 2021 [2]. The increment of CPI change is less. However, this scheme is changing a little. The average month-to-month CPI increase for medical care services is 0.476% for the period between January 2022 to April 2022 while it was 0.186% in 2021 [2].

Period CPI Medical Care Services YoY change %
Nov-18 – Nov-19 5.14%
Nov-19 – Nov-20 3.21%
Nov-20 – Nov-21 2.07%

College Tuition Cost of Increase

College tuition has gone up very steeply past 2 decades. The pandemic did not drastically influence the cost of tuition increase. The year-over-year CPI increase for college tuition increased by 1.92% from November 2018 to November 2019 [2] and 0.62% and 1.85% for the same period from 2019 to 2020 and 2020 to 2021 respectively. Although the tuition increase did not change significantly during this period, the way the class is operated changed drastically. The most of classes are shifted to online settings, spurring Online meeting systems such as Zoom, MS Teams, Google Meet, and so on.

College tuition has gone up exponentially. The college tuition has been increased by 15.6 times from January 1978 to April 2022 while the CPI increase for all items in the U.S. cities is around 4.6 times for the same period. The inflation for college tuition is approximately 4 times higher than the average of all items. As you can see from the following graph, the annual CPI change for college tuition is higher than that of all other items. But the annual CPI increase of college tuition is on decreasing trend. It’s been already expensive enough. This could be at least good news.

So why the schools can increase the tuition? The answer is because they can. There is not much competition and there are limited regulations when it comes to the right price. How much a college education is worth?. There is no definitive answer to that question.

Period CPI increase% All Items  CPI increase % College Tuition 
January 1978 – April 2022 360.4% 1461.9%
Period CPI College Tuition YoY change %
Nov-18 – Nov-19 1.92%
Nov-19 – Nov-20 0.62%
Nov-20 – Nov-21 1.85%

References

1. Consumer Price Index Summary, Economic News Release 8:30 a.m. (ET) March 10, 2022
Bureau of Labor Statistics

2. Consumer Price Index (CPI) Databases
U.S. BUREAU OF LABOR STATISTICS

3. What Nebraska Furniture Mart chairman Irv Blumkin thinks about inflation and the supply chain
The Dallas Morning News

4. Monthly Retail Trade
U.S. Census Bureau, U.S. Department of Commerce

5. US Pandemic-Driven Demand for Appliances Is Declining, Whirlpool Says
PYMNTS.com

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