| Gas Prices and the Impact of Inflation | | | | goods and services averaged 3.59% annually. |
| | | | How is Inflation Relevant? |
| Year Item Price Rate of Inflation | | | | Inflation has an impact on our plans for the future. |
| 03/80 Gasoline (per gallon) 1.252 | | | | When saving for retirement, college, a house, or |
| 03/05 Gasoline (per gallon) 2.065 2.02% | | | | simply budgeting for the next 12 months, the cost of |
| 03/80 Bread, white, per lb 0.502 | | | | goods and services have a direct impact on your |
| 03/05 Bread, white, per lb 1.002 2.80% | | | | goals. Due to inflation, your goals may cost more in |
| 03/80 Consumer Price Index 80.10 | | | | the future than today. A meal that costs $10 today |
| 03/05 Consumer Price Index 193.30 3.59% | | | | may cost $10.36 in one year. A car that costs |
| Source: U.S. Department of Labor - Bureau of Labor | | | | $10,000 today may cost $10,359 in one year, and |
| Statistics ( | | | | almost $12,000 in only 5 years. So, when planning for |
| What is Inflation? | | | | the future, you must consider inflation and the effect |
| Inflation is an indication of the rising cost of goods | | | | it may have on your goals. |
| and services in the economy. For example, a gallon of | | | | Ways to Combat Inflation |
| regular unleaded gasoline was 1.252 in March of 1980. | | | | One way to overcome prices that may rise due to |
| Comparatively, that same gallon was priced at 2.065 | | | | inflation is to make your money grow at a rate |
| in March of 2005. Therefore, over the last 25 years, | | | | higher than inflation. For example, if inflation is 3.59% |
| the cost of a gallon of gas has increased at an | | | | annually, you will need to make your money grow at |
| average annual rate of inflation of 2.02%. As another | | | | 3.60% or higher. Otherwise, though you may be |
| example, during the same 25 year period, the price | | | | saving and investing toward your goals, you may |
| of white bread increased at an annual rate of 2.80%. | | | | never actually achieve them. |
| The Consumer Price Index (CPI) is widely accepted | | | | Many investments provide a vehicle for \"outpacing\" |
| as the measurement of general inflation in the United | | | | inflation. Generally, stocks and bonds have historically |
| States. The CPI is calculated monthly by the U.S. | | | | earned an annual rate above inflation. Through careful |
| Department of Labor - Bureau of Labor Statistics. It | | | | planning and investing, it is possible to overcome |
| is an index based on the cost of items in more than | | | | inflation and its impact on prices. |
| 200 categories. They include: breakfast cereal, milk, | | | | In summary, a plan that does not account for |
| wine, bedroom furniture, men\'s shirts and sweaters, | | | | inflation is in danger of failing. Therefore, it is |
| jewelry, physicians\' services, televisions, sports | | | | important to remember inflation and invest in assets |
| equipment, college tuition, postage, and haircuts. | | | | that will enable you to achieve your goals despite the |
| Simply stated, the CPI tells us the average change | | | | effects inflation may have on the cost of goods and |
| over time in the cost of goods and services. From | | | | services. |
| March 1980 to March 2005, the inflation of general | | | | |