by Brian Balfour
Senior Vice President of Research, John Locke Foundation
With June’s inflation rate clocking in at an annualized 9.1%, the highest rate since Nov. 1981, people across the nation are feeling their budgets being squeezed.
For a better picture of what that means in dollar terms, the U.S. Congress’ Joint Economic Committee has been publishing it’s “State Inflation Tracker” each month.
Nationally, inflation is costing the average American household $718 per month, compared to prices in Jan. 2021.
Furthermore, the report notes, “Over the 12-month period from July 2022 through June 2023, the inflation that has already occurred will cost the average American household $8,616 even if prices stop increasing altogether.”
In other words, if prices remained at their current levels for the next 12 months, the average American household would pay $8,616 more on goods and services compared to Jan. 2021 price levels.
North Carolina households are hit slightly less hard than the national average, according to the report.
The average North Carolina household is paying $641 more this month due to inflation, and would pay $7,691 more over the next year if prices remained the same.
How many of you have received a pay raise of $7,700 in the last year? If not, you are financially worse off due to the inflation tax.
Price inflation is especially acute in transportation, energy, and groceries. This makes the inflation tax an especially regressive tax, as low-income households must spend a larger share of their income on those household staples.