Inflation Means A Bay Area Resident Will Spend $4,400 More For The Same Stuff This Year

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April 12, 2022

Buying pretty much anything in the Bay Area is generally more expensive, but adding rising inflation into the mix has made things even harder.

Just the thought of filling up the gas tank at $6 a gallon can induce anxiety. 

The White House announced Monday that the latest Labor Department data is expected to show very high inflation numbers, primarily due to spiking energy costs caused by Russia’s invasion of Ukraine. Now, any hopes of seeing relief for our wallets soon don’t look good. 

So just how much of an impact has inflation had on consumer goods? 

A Chronicle analysis of consumer price index data shows that a person in the Bay Area will spend about $4,400 more per year on major goods and services such as groceries, transportation and health care than they did two years ago. According to the Bureau of Labor Statistics, prices of goods and services in the San Francisco metro area are up by 5.2% year-over-year in February. Inflation was actually higher in the U.S. overall in that period, with the price of goods and services rising 7.9%. 

“Average consumers will feel the bite of this and either pull back on spending or get into debt at a time when interest rates are rising,” wrote Jamie Court, president of nonprofit Consumer Watchdog, in an email. “The average household does not have another $4,400 per year to spend on the essentials of life.” 

“California was already unaffordable, now it’s become even more so,” he said. “The Bay Area is the epicenter of the unaffordability crisis given how high housing prices are.” 

Households in the San Francisco metro area spent an estimated average of $91,700 annually in 2019-2020, the most recent years for which data was available. We calculated the average costs for major spending categories in that same time frame, and found the price increase for each of those categories from the latest CPI data. 

The biggest price increase came in the transportation category, rising 16.5% from February 2021 to 2022 for a total increase of about $1,830 a year. Within that category, the largest jump in dollars spent was for motor fuel, which increased 36% year-over-year. Prices for used cars and trucks rose 40% year-over-year. 

Food prices increased 9% year-over-year, leading to an average annual increase in spending of more than $1,000. Meat, poultry, fish and eggs went up 11%; dairy rose 9%; and fruits and vegetables increased 7% in the past year, according to the Consumer Price Index for the San Francisco metro region. 

Court said this is “not sustainable” and lawmakers need to do more, “through tax credits for low wage workers or other means or people will simply be priced out of their lives.” 

“It’s shocking when you hear the increase in terms of dollars, rather than percentage points,” he said. “A $15-per-hour worker would have to work nearly two months to make up for inflation at that rate, and that’s before taxes.” 

He fears that in California, more people will leave due to these rising costs, and advises redistributing the wealth in the state better and giving lower income residents incentives to stay. 

Court said consumers will eventually start spending less, particularly on travel and high-end products. 

“It will take some time, particularly as we have a pandemic hangover and savings that accumulated during the pandemic to use up,” he said, and that people are itching to get out and about and risk overspending on credit cards as interest rates rise. 

“It could be a perfect storm for those without much disposable savings,” he added. 

So what should consumers do? For one thing, don’t spend on things you don’t need, he said. 

“People need to be conscious of the price of things, more so than ever,” Court said. “Consumers need to comparison shop and hold off on discretionary purchases that don’t make sense.” 

He said that workers have the upper hand right now as they are in high demand, and “should consider asking for raises to keep up with the price increases.” 

Kellie Hwang is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @KellieHwang

Consumer Watchdog
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