For our family of four...
In 2006, the grocery bill was about 15% of our take home income.
In 2006, our health insurance bill was about 15% of our take home income.
In 2006, our gas and electric bill was about 3% of our take home income.
In 2006, our auto gas bill was about 2.4% of our take home income.
Those four things make up about 35% of our take home income.
2007?
Our grocery bill is now about 10-15% higher than it was in 2006. Milk, eggs, bread, beans, etc are more expensive. We are actually buying smarter and cheaper and less, and we still pay 10-15% more.
Groceries are now about 17% of our take home income.
Our health insurance bill went up by 18% this year.
Health insurance is now about 18% of our take home income
The gas and electric rates has gone up over 20% from last year. Because we spent a thousand dollars to insulate our home, turn on the heat much less, converted all our bulbs to CF and did other changes (total cost about 2,000), our total gas and electric cost didn't go up. Still, we had to spend a couple thousand to make those changes (and live in a colder house :).
Gas and electric costs are still 3% of our take home pay, but we had to pay up front to keep those costs LEVEL.
Gasoline is now about 20% more than it was last year.
Auto gas bill is now about 3% of our take home income.
Those four things now make up about 40% of our take home income.
This has happened almost every year since we moved back to the US in 2003.
And I haven't even included the cost of our daughter's education and a few others. The ones above are what most families have to pay.
How is it the cost of essentials can go up so much every year, taking up more and more of our income, and inflation rates are supposedly low?
How is it that every year we make financial and lifestyle sacrifices to keep those essentials manageable, yet they still rise as a total percentage of our income, and inflation rates are supposedly low?
THis is not a complaint. We make more income than the average family of four. We've got wiggle room. That wiggle room allows us to afford a mortgage on a house in San Francisco and send our children to private school (at assisted tuition) and travel a bit.
But what about that hypothetical family of four who is making half of what we do (and there are a lot). Those costs of health insurance, food, gas and heat would have gone from 70% to 80% of their take home income. Perhaps that hypothetical family of four has employer-supplied health insurance (we don't). Perhaps they have cheaper food costs in their area. Perhaps they have a more fuel efficient car and don't drive as much (doubt that, we drive on average 4 miles a day total), but the concern and question is the same.
Prices of essentials are rising dramatically and consistently every year taking up more and more of our take-home income and making us make more and more sacrifices.
And that hurts lower and middle income families most.
How is it that we can report such low inflation numbers every year?
Someone explain to this biologist (I understand the intricacies of DNA repair, but ask me economics and I freeze) how this is so?
I do have to say though, that the cost of that really nice 46" LCD wide-screen TV is about 30% cheaper than it was last year.