If you feel like stuff has been getting more expensive lately, you’re right.
The Consumer Price Index, which tracks most items on the average city-dwelling American’s shopping list, rose 2.9% last month — its fastest pace since 2012.
When prices speed up, paychecks don’t go as far. Average hourly earnings only increased 2.7% over the year in June, which means that most workers’ paychecks actually aren’t going any further at all.
The Federal Reserve also monitors prices closely to decide whether to hike interest rates. Those rates influence how much people pay for all kinds of credit, and can throw off federal budget projections if they start rising too fast. The Fed also watches a slightly different metric called Personal Consumption Expenditures, or PCE, which capture rural residents as well as indirect costs like employer-sponsored health benefits.
But there’s a lot going on underneath the average rate that determines whether any particular individual is paying more, depending on what they typically buy.
For example, much of the recent boost is driven by the price of oil, which has recovered from under $30 a barrel during a supply glut in 2015 to over $70 a barrel today.