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There was a time during the pandemic when many of us believed we were getting back to normal. People were vaccinated and even boosted, mask mandates had disappeared in most states, and there was a general feeling that the worst was behind us.
There was just one problem: the economy was far from normal. While inflation had been historically low from 2012 and all through 2020, it started to tick up in April 2021, rising to 4.2%. For perspective, the average inflation rate from 1960 to 2021 was 3.8%. Inflation has increased every month since April 2021, reaching 8.6% in May 2022. That’s the highest rate since 1981, according to a CNBC report.
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Most of the current rise in inflation is in the energy sector, specifically in fuel costs. The greater context here is the war in Ukraine started by Russia.
And yet, while energy prices are driving the current bout of inflation, many Americans are cutting back across the board. In fact, a GOBankingRates survey found that the greatest number are cutting back on dining out even though prices there haven’t risen as much. Let’s take a closer look at where Americans are cutting back and where they are tightening their financial belts the most.
Where Americans Are Cutting Back
Even though some of these expenses could be considered necessities, many of the 2,357 people who responded to the GOBankingRates survey are cutting back in these areas.
Among those surveyed, more than one-third said they are cutting back on dining out. That is by far the largest group and is more than twice the percentage of the next-largest group. Interestingly, the cost of food at home has been rising faster than the cost of food away from home, according to BLS data. For the unadjusted 12 months ended May 2022, food at home increased by 11.9%. Meanwhile, food away from home increased by 7.4%.
The latter percentage is still high, historically speaking. Nevertheless, it highlights the fact that dining out tends to be one of the first items that many Americans cut from their budgets when costs rise.
Mask and even testing requirements have slowly vanished for people traveling both domestically and abroad, but despite the fewer hurdles to clear while traveling, some people are deciding to stay home. In fact, 16% of GOBankingRates survey respondents said they are cutting back on travel.
Of course, …….