COLORADO SPRINGS — Inflation is rising at the fastest pace since November 1981.
The Consumer Price Index shows it increased 9.1 percent over the past year, with the biggest contributing factors being food, gas, and rent. The energy index rose 7.5 percent over the month and contributed nearly half of the all items increase.
"I don't think it's as worse as it can get," said Naqiera Johnson, Colorado Springs resident.
Forcing many young people like Johnson to change their habits.
"I still like to go out and enjoy myself but a little less now. Just to make sure I can afford my groceries, and day to day living," said Johnson.
"At the end of the day, people are making decisions based on their household budgets. If they're spending 10, 15, or in the case of energy 40 percent more then they were a year ago. That is not good for the standard household budget," said Tatiana Bailey, Director of the UCCS Economic Forum.
Bailey believes we are close to or may have already hit peak inflation. She doesn't expect it to rise, but says there are a lot of variables to consider like the Russia-Ukraine War, supply chain issues, worker shortages, and COVID lockdowns from large economies such as China.
"Part of the reason why I am saying it is close to or at peak is because of what economist call the baseline effect. That basically means is what we're comparing to is a year ago. The report that came out today is comparing June 2021 to June 2022, that 9.1 increase. However, prices started increasing in April 2021, and really started taking off summer of last year. Let's just say that headline inflation number comes down to 8 or 8 1/2 percent, does that mean that inflation is not going to be an issue moving forward and it is going to decline each month. That is a little misleading because if prices were already higher compared to 2019 that means any increases we're seeing now is on top of the major increases we saw last summer," said Bailey.
Inflation hitting home-buyers particularly hard. The foreclosure rate quickly climbing to pre-pandemic levels, and higher.
"Certainly an area of concern in terms of some middle and lower income people getting evicted or losing their home," said Bailey.
She doesn't believe recent interest rate increases will help or relive the situation.
"It will dampen demand some, particularly for housing and the financing of large household items like cars, washing machines. It will help some, but it is not going to solve the problem. It is not going to solve the problem. It is not going to solve the Russia-Ukraine crisis which relates to both food and energy, it is not going to relieve the COVID lockdowns and the fact that we have these new variants, it is not going to solve the fact that people started having all of these children in the 60s and 70s, or the labor shortages," said Bailey.
She recommends becoming a more careful spender, cutting back on driving, and switching to an electric car.