The Federal Reserve (The Fed) kept interest rates the same at it's meeing on Tuesday the 15th. They believe the economy is on "firmer footing," and the labor market is "improving gradually."
While The Fed is concerned about rising prices, especially crude oil, one of the members of The Fed, William Dudley, drew sharp criticism when he spoke in Queens, New York last Friday and excalimed that he thought underlying inflation was low despite rising food an energy prices. A member of the audience shouted, "When was the last time, sir, you went grocery shopping?"
Let's face it, The Fed is all about keeping "core inflation" in check. What is "core inflation?" It is everything but food and energy. Who doesn't eat and put gas in their car?
The price of imported goods has risen a steep 7% over the last five months, which annualizes to over 15%. Overall prices are up 8% since last February. That's substantial and can have a harsh affect on our budget.
With inflation rearing its ugly head, whether The Fed realizes it or not, we need to track our spending. All the more reason to track it in real time. If we give ourselves, say, $500 a month to spend on groceries, and we go to the store on the 1st of the month and spend $300, which is 60% of our budget, we know we need to slam the brakes on our grocery shopping for the rest of the month if we don't want to spend more than our budget. After all, that's why we create the budget so we can adjust as we are spending. It's too late to adjust at the end of the month when we find we've spent $800.
With the increase in gas prices what are some of the things you've had to sacrifice? Let me hear from you.