The U.S. Bureau of Labor Statistics has released new data about the current situation in the American economy. In September 2022, the U.S. annual inflation rate decreased for the third consecutive month to 8.2%, the lowest level in seven months, down from 8.3% in August but beyond market expectations of 8.1%.

Due to higher prices for gasoline (18.2% in September vs. 25.6% in August), fuel oil (58.1% in September vs. 68.8% in August), and electricity (15.5% in September vs. 15.8% in August), which was the most since 1981, the energy index grew by 19.8%, down from 23.8% in August. 

Food prices (11.2% in September vs. 11.4% in August), which were at their highest level since 1979, and the price of pre-owned vehicles (7.2% in September vs. 7.8% in August), both experienced a little decline. On the other hand, the cost of housing rose more quickly (6.6% in September vs. 6.2% in August). However, prices have been stuck at levels not seen since the 1980s for months, which has caused consumers hardship. The latest Consumer Price Index, which tracks the cost of everything from eggs to books, revealed that price increases are still soaring, and that inflation even spread from the goods sector into the services sector in September.

One indication that inflationary pressures are still high is the core rate, which excludes volatile food and energy prices, which increased to 6.6% in September, the highest level since August 1982 and above market expectations of 6.5%.

Students are particularly exposed to the consequences of inflation due to rising tuition, increased personal expenditures and the prospect of having additional loans to pay for the same degree. This is especially true for students who live and dine mostly off-campus or for students whose college’s room and board costs have increased.

Marco Andrés Feliciano, a student at SUNY Oswego majoring in finance, said that his life has gotten much more expensive during the past years. Feliciano explains that as a college student, it is very difficult to keep up with expenses.

“I’ve definitely noticed that the prices have increased considerably during the last four years,” Feliciano said. “As a full-time student without a job currently, it is very hard to keep up with expenses such as groceries, gas, and rent, not including maintenance on my car and extra activities.”

Feliciano also explained how his purchase power has decreased during the past years, leading to increases of 50% in the cost of haircuts for example.

“With that being said, my college life has definitely gotten more expensive,” Andrés said. “To give you a simple example, my haircuts four years ago were $20 with tips for a considerable number of years. Now I have to pay at least $30. Another example is the rise in gas prices. At least four years ago, when I got my first car, filling up my tank was at most $40. The price to fill up my tank now is at least $60. With these small examples and the rising prices, I feel like I’m slowly lowering my purchasing power. “

The U.S. is not the only country that is undergoing inflationary pressures. Mohammed A. Mohammed, an Egyptian SUNY Oswego student majoring in electrical and computer engineering, describes how the supply chain short cuts the world is experiencing has stressed considerably the Egyptian pound.

“As a matter of fact, there are many things that saw a rise in their prices and this can make the quality of life lower as you can buy fewer goods with the same amount of money,” Mohammed said. “Generally, inflation is imported from other countries, especially wheat products, which saw a rise due to the war in Ukraine. Also, COVID-19 impacted the number of tourists coming to the country.”

Sergio Andrés Nogales, financial analyst at Roc360, has been working in the financial sector since 2018. Andrés has also worked as a financial analyst at Renta 4 and has worked as a credit risk analyst at Experian. Before starting his current position in Roc360 he worked as corporate derivatives sales in Commerzbank AG managing daily communication with clients and use of structured pricing models.

Andrés believes that the high inflation we are experiencing is mostly due to the policies of central banks around the world. The Federal Reserve Board, also known as “the Fed,” is the central bank of the United States that conducts the nation’s monetary policy. According to Andrés, the enormous increase in the monetary supply that the Fed made overheated the economy.

“The central banks of the world have increased the monetary supply considerably to counteract the deflationary effect that COVID-19 had,” Andrés said. “Firstly, we didn’t experience a huge increment in prices because families saved most of the government aid, but when families started using the printed money in 2021, the inflationary spiral started.”

An important point Andrés wanted to highlight is that inflation is raising wages, so the gap between the increases in prices and salaries has not been that intense in the United States. However, according to Andrés, students usually work in low-skilled jobs, which are the ones that experience lower wages. The reason is that this kind of work is easily replaceable by other workers or even with technology. Thus, the reason why students have been one of the most affected collectives by inflation.

“Rental prices have gone up a lot in the last few years,” Andrés said. “But wages have also gone up, which has caused some compensation. However, wages have not risen as much as inflation, and the bigger problem for students is that they develop low-skilled jobs to earn money for college. Those jobs are easily replaceable by the most productive workforce like technology or even fewer workers working longer hours, and that is one of the reasons why students have been one of the most affected collectives.”

When asked if the exorbitant prices in the real estate market are impacting most heavily on students, Andrés said that students have multiple options for housing. Meaning that choosing where to live is very important because it can help someone save a lot of money.

“The cost of an apartment to live in is often paid by the parents of the students,” Andrés said. “If you want to live next to the university, you will pay more for a large, spacious apartment, but if you move to a humbler area, you can lower the price depending on what people are willing to pay. Rents have risen dramatically, along with services, etc. If there is no increase in salaries that is equal to the increase in inflation prices, you will always lose purchasing power. That’s why if students don’t want to make strong efforts in their lifestyle, they should look for good deals outside campus.”

The forecast for inflation represents one of the biggest concerns for the American economy, as the Pew Research Center stated in May of 2022. Andrés explained how he thinks inflation will develop in the near future and why.

“There is a long time to go before inflation can be brought under control, but it will be brought under control,” Andrés said. “The 20% of U.S. dollars were printed after or at the same time as the pandemic or COVID phenomenon was occurring. It was an outrage. I had acquaintances who did not work and had bonds that continued to pay their salaries, which allowed many people to save and not move the economy, but when that money was spent, inflation appeared. It has taken us two years to see the consequences of the pandemic. It seems reasonable that we could see inflation under control in another two years, although I was surprised at how fast interest rates are rising. Now we are getting back to normal. “

Finally, Andrés, as a professional in the real estate sector, gave some tips for students to save money when picking places to live during college.

“I studied in the French city of Nantes and in the Canadian city of Toronto,” Andrés said. “I always lived away from inside the city or even in the vicinity of the university and the reason was that in the old town of the city of Nantes, prices were excessively expensive for being the homes that were closer to the university. Owners know they can ask for more because they will have greater demand. You pay the plus of comfort and that you are in a central area etc. To save, you go to areas that are on the outskirts, but well connected with access to public transport or without access in case you have a car. Apartment sharing is a very good option as well to share the expenses and reduce your college life costs.”

Some students say they are living in hard times. According to Andrés, not only the increase in prices but also the rising interest rates will make student loans more difficult to pay. The bottlenecks in the distribution of products around the world, the war in Ukraine, COVID-19, and the energy crisis are other factors that exacerbate inflation.

Photo provided by: U.S Bureau of Labor Statistics