Inflation feels so high partially because most household items that we buy, like food and transportation, have gone up a ton. The chart shows the top five items the average household spends their money on. Four of these are going up at a faster pace than overall inflation.

The good news is that inflation data was released this week and prices have risen 5% over the last year, which is the slowest it’s been in two years.

But, here’s the bad news. Even though we hear about inflation “going down”, it doesn’t mean that the price you’re paying for things is lower today than in the past. It’s actually HIGHER. Inflation going down just means that prices are rising at a slightly slower pace than they were. But they are still way higher than the past.

Also, don’t get too excited about healthcare inflation being the lowest on the chart. It’s that way partially because the data is lagged and the prices cooled during covid. If you zoom out, healthcare prices have been rising faster than almost anything else.  

Don’t let all of this change your mindset around creating wealth. Focus on what is in your control. Keep spending less money than you make. Keep enough cash to cover an emergency. Invest everything else in assets that historically outpace inflation, like index funds and investment real estate!

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.‎

‎-Vivi & Shane