How Arizona Residents Should Adjust Budgets Amid Record Inflation

ARIZONA, AZ — Inflation in March hit its highest point since 1982, rising 8.7 percent in the western region of the U.S. over the previous year, according to a new Labor Department report released Tuesday. This is unwelcome news to Arizona households already struggling to make ends meet.

Inflation has been on the rise for months for a plethora of reasons, from a backed-up supply chain and increased demand to uncertainty in global food and energy markets worsened by Russia’s invasion and continued war in Ukraine, The Associated Press reported.

Arizona's Republican Gov. Doug Ducey took to social media Monday and Tuesday to blame Democratic President Joe Biden for soaring inflation over the past year.

"President Biden’s inflation disaster is costing AZ families $500+ more per month in added household costs," Ducey wrote in a Facebook post on Monday. "Curbing the damage of Biden’s policies is a top priority. Cutting taxes is an answer. We’ve done so by adopting the lowest flat tax in the nation."

Ryan Sweet, a senior economist with Moody Analytics, told CNBC in March that inflation costing the average American $296 more a month was “going to get worse before it gets better.” The Phoenix metro area has notably seen inflation worse than the rest of the country over the past year, but the Labor Department has not yet released its March inflation report specific to the Valley.

Across the country, Americans haven’t dealt with such high inflation since 1981, and the 1.2 percent increase in the consumer price index from February to March was the biggest month-to-month jump since 2005.

And with gas prices that have increased 48 percent over the past year and food costs up 10 percent, budgeting for inflation becomes evermore important.

Estimates vary on how much extra money Arizona residents should build into their household budgets through the end of the year. Bloomberg News did the math, saying households should plan to spend $5,200 more this year, or $433 a month, for the same “consumption basket.”

Over the past year in the western region of the U.S., the cost of food at home has increased 11.2 percent, including 14.4 percent for meats, poultry, fish and eggs and 10 percent for fruits and vegetables. The cost of transportation has increased almost 23 percent over the last 12 months, including a 34 percent increase for used cars and trucks.

Not all populations feel the same pain at the checkout counter and gas pump, or when they’re making out their rent checks.

Analyses by the Penn Wharton Budget Model and Wells Fargo showed low- and middle-income U.S. households are hurt the most by inflation. The Wells Fargo study, cited by CNBC, showed the middle class is being hit the most; and within that group, Hispanics and Latinos have the steepest jump in living costs.

There’s no way to know exactly how much prices will rise, though the Labor Department’s past consumer price index reports portend continued inflation.

One way to keep track of how much more you’re paying is through a Bureau of Labor Statistics inflation calculator. Say your monthly household budget was $4,982 in March 2021; a year later, you’d need $8,129.09 to pay the same bills.

“This is really harmful for people on fixed incomes,” Carol Ehlers, a human sciences specialist with the Iowa State University Extension and Outreach, said in a news release recommending the inflation calculator as an effective budget-building tool.

“Higher prices mean families need to be more strategic about their spending and find ways to stretch their income. Budgeting for periods of higher inflation challenges families to rethink the way they spend and determine which expenses they potentially can reduce or eliminate,” Ehlers said.

Analysts and others who spoke to CNBC offered some tips on keeping household budgets on track, including combining errands in one trip to save on gas, searching for apps and digital coupon sites, and canceling or renegotiating subscription services.

Also, experts said, it’s important to check the household budget weekly to see what costs are increasing the most and where budgets can be trimmed.