After a few rate hikes in 2017, the news that the Federal Reserve is expected to raise rates in March hardly set off a ripple when the rate of inflation squeaked up 0.5% in January .
But dig a little deeper into the Consumer Price Index (CPI) and you’ll see that the inflation rate, which the Fed is forecasting at 2.6% in 2018, has doubled since 2016. Little by little, that makes goods and services, and money to borrow, more expensive.
Business reporters can help their readers make smarter decisions with their money by looking at one or all of these angles:
Give your readers a tutorial on inflation
Inflation is one of those facts of financial life that gets no respect. Seeing how relatively modest increases in inflation can add up over time will help your readers take inflation seriously. Use this calculator from the Labor Department’s Bureau of Labor Statistics (BLS) that issues the CPI to report your story. Present a glossary of “terms to know,” describing your own reaction to estimating the cost of the goods and services you expect to buy in five, 10, 15, and 20 years to get the point across about taking inflation seriously. Or assemble a group of readers to sit down and crunch the numbers with you, in person or online. This calculator from BLS is a useful tool to view monthly and annual rates of inflation over time .
Show readers some smart ways to beat inflation
Retirees and near-retirees can’t expect to pay future costs by putting too much of their money in savings accounts currently paying 0.18%-0.19%. Several online banks are upping the ante by paying 1.35% and higher on savings accounts and Certificates of Deposit (CDs). Walk readers through the mechanics of building CD “ladders,” “bullets” and “barbells” to take advantage of higher interest rates. But that’s only part of a story on investing for a secure retirement, which should include a reasonable allocation of assets to stocks, to keep money growing in retirement above the rate of inflation. Good sources to interview include local bankers and financial advisers, or research unbiased information and resources from organizations and agencies such as FINRA’s Investor Education Center .
Ask readers how they plan on coping with inflation
Some costs are rising above the overall rate of inflation. The price of a gallon of regular gasoline jumped 13%, or $.27 in 2017, to $2.41 . Are more of your readers carpooling to work? Riding a bicycle? Have more asked to work at home a day or two a week? Food prices are also expected to increase by 1%-2%, according to the U.S. Department of Agriculture. The increase seems slight until you read that the average “moderate” monthly grocery bill for a family of four was $1,052 as of November 2017 . How do your readers plan on managing costs in 2018? Engage them in a discussion using your news organization’s social media. Not that you want to bash younger readers, but this USDA survey found that Millennials purchase more costly, prepared food than any other generation because “prepared foods, sugar and candies, and pasta all require minimal preparation for consumption, while grains and meats require cooking.”
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