How MA Residents Should Adjust Budgets Amid Record Inflation

MASSACHUSETTS — Everyone's been feeling it - trips to the grocery store cost a little more, filling your gas tank is an arm and a leg, and getting deals while going out to eat is almost unheard of these days thanks to inflation.

Inflation hit a new, 40-year high in March, jumping 8.5 percent over the previous 12 months, according to a new Labor Department report released Tuesday. The news spells out more uncertainty for Massachusetts households already feeling the pinch of rising costs for necessities.

Not to mention the outrageous spike in rent across cities and towns in Massachusetts - as skyrocketing prices have local leaders calling for rent control. "It is unsustainable how much our residents and families have to scrape together just to make rent," said Boston Mayor Michelle Wu, who included support for rent stabilization in her campaign.

Inflation has been steadily rising for months for a variety of reasons, ranging from a bottlenecked supply chain and increased consumer demand to volatility in global food and energy markets worsened by Russia's war in Ukraine, The Associated Press reported.

Ryan Sweet, a senior economist with Moody Analytics, told CNBC in March that inflation costing Americans $296 more a month was "going to get worse before it gets better."

Related: Nearly 8% Inflation Is Highest In 40 Years: What It Means In MA

In fact, Americans haven't managed 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 even more important.

The cost of vacation also is increasing. Airline fares are up about 12 percent. Leasing a car? That'll cost 24 percent more. Hotels cost about 29 percent more, and if you're planning to attend a major sporting event, expect to pay about 21 percent more.

Estimates vary on how much extra money Massachusetts 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."

In the Boston area, food prices advanced 1.8 percent for the two months ending in March. Over the year, food prices rose 7.1 percent. Prices for food at home increased 6.1 percent since a year ago, and prices for food away from home increased 8.7 percent.

Proteins like meat, fish, poultry and eggs are up 13 percent. Fruits, vegetables, cereals and bakery items are up almost 8 percent. Dairy and related products cost about 5 percent more.

The energy index jumped 14.8 percent for the two months ending in March. The increase was mainly due to higher prices for gasoline (24.5 percent). This was the largest 2-month advance in the area since June 2009 (+29.6 percent). Prices for natural gas service increased 8.1 percent, while prices for electricity edged up 0.4 percent for the same period.

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