Increasing gas prices bumped up inflation last month, and while inflation is not accelerating, energy and medical costs are hurting retired seniors.
Consumer prices rose 0.7% from January to February, the Bureau of Labor Statistics reported on Friday. The dramatic increase was largely due to a temporary rise in gasoline prices. Core inflation, which backs out volatile food and energy items, increased 0.2%.
“There’s no need to hit the panic button,” economist Hugh Johnson said. “This number can jump around,” he said of gas prices.
Over the last 12 months, consumer prices on all items increased 2%, a number that many economists and the Federal Reserve Board considers healthy for the economy.
But for retired workers living on a fixed income, paying more at the pump hurts. Gasoline prices rose for 37 consecutive days until they began to fall on February 23, according to AAA spokesperson Michael Green. Even with the decline, gas remains expensive. The average price for a gallon of regular, unleaded gas is $3.69.
“Not all our members were fortunate to get a pension, so for them, food and gas is a concern,” said David Blank, Deputy Communications Director at Alliance for Retired Americans. The organization has a national membership of 4 million people and advocates for favorable policies for people in their golden years.
Medical costs are another factor affecting seniors. Prices rose 3.9% over the last year. Medical inflation, as well as education, has a higher inflation rate than the rest of the economy, said Michael Englund, chief economist at Action Economics.
As costs increase, some people can’t retire, while others resort to looking for part time work to supplement their income.
“Jobs are still an issue, and if you are a senior trying to have a part time job, it’s hard,” Blank said.
Young workers are also affected by unemployment and gas increases, but tend to fare better than seniors.
Twenty-two year old Charles Xavier Lacerte considers gas prices a necessary evil, acknowledging he has to pay the increases in order to get to his job at Tuscan Kitchen in Salem, New Hampshire, a 25-mile commute from his home.
“I plan for gas prices to be 20 cents higher,” he said. Lacerte spends $60 a week on gas and compares costs at four nearby stations before filling up. Lacerte said he deals with rising gas and food prices by living frugally and eating at work. His income has also increased over time, he said, helping to make expenses manageable.
High school and college students conveyed frustration, but kept their humor, over gasoline costs. Numerous tweets on Twitter compared rising prices to grade point averages.
Something is clearly wrong when gas prices are higher than your GPA.
— Sabrina Lieberman (@sabrinaliebs) March 13, 2013
I wish my GPA looked like these gas prices
— Grant Lindahl (@GrantLindahl32) February 12, 2013
Since gas has already come down, next month’s consumer prices won’t be as high, economists say. But consumers shouldn’t expect them to keep dropping.
“They will probably trend upward on a long-term basis, but there will be a whole lot of variation,” said Mark Thoma, professor of economics at University of Oregon.
What’s important, Thoma said, is not just the inflation rate, but whether wages keep pace with inflation.
And that’s the real trouble for retired people. They face rising costs on necessities like gas, food and health care, but live on fixed incomes.
“Health care goes up faster than Social Security,” Thoma said.