In the midst of the holiday season, finances are on many people’s minds. Although inflation cooled in some areas in October, in others prices grew significantly.   

The Bureau of Labor Statistics’ consumer price index (CPI) found that rent increased by 6.8% in October 2023 compared to October 2022. The prices of groceries rose by 2.1% and the price of electricity by 2.4%. 

One of the largest year-over-year increases was car insurance (19.2%). 

Other items that saw a notable rise in prices include bread (6.3%), beef (8.9%), elementary and high school tuition and fees (5.1%), day care and preschool fees (4.8%), and manicures and haircuts (5%).   

At the same time, consumers do not have more income to cover these higher prices as real weekly earnings did not change from October 2022.

The reality of inflation and low weekly earnings has caused many households to cut back their spending, especially in discretionary categories. Black Friday spending was down. Many who did take advantage of the deals used buy-now-pay-later plans.    

Increases are not confined to inflation. In the 3rd quarter of 2023, debt in every area has also increased. Mortgage debt rose by 0.5 trillion or 4.17%. Auto loan debt increased by 0.07 trillion or 4.61% and student loan debt by 0.03 trillion or 1.91%. 

The largest increase came from credit card debt (0.15 trillion or 16.13%). In the 2nd quarter of 2023, total credit card debt hit $1 trillion for the first time, and this past quarter, it hit another record.   

In total, debt saw an increase of 0.79 trillion or 4.79% compared to the 3rd quarter of 2022.

Consumers’ views on the economy demonstrate the effect of inflation and debt increases. In November, The Conference Board found that consumers’ fears of a recession decreased slightly compared to the rest of this year, but “two-thirds of consumers surveyed in November still perceive a recession to be ‘somewhat’ or ‘very likely’ to occur over the next 12 months.” A sense of hopefulness about the economy is especially prevalent in younger Americans.   

See IWF’s regularly updated Household Financial Report Card below for a summary of inflation and debt increases year-over-year.