What Your Bills Could Look Like in 2030

Sticker shock at the grocery store? Price hikes at the pumps? Prices are going up and spending more for basics can be startling. Do you remember the first time you noticed prices increasing? It often happens so gradually that we don’t even notice. Inflation is more complicated than we realize and it’ll be with us for the rest of our lives. So, what could prices look like in 2030?

What Is Inflation?
Inflation is a measurement of how fast the prices of goods and services increase. As inflation rises, prices do too because it takes more dollars to buy the same things. Deflation is the opposite – it brings lower prices and more buying power.

Both inflation and deflation are tied to a complex web of economic factors – such as supply and demand, wages, government spending, taxes, and more.

The Consumer Price Index (CPI) is a useful indicator of inflation or deflation. It’s a sort of cost-of-living index, looking at price changes, over time, for the goods and services used by households.

So, what could prices look like in 2030? Here’s some historical data and some projections on how prices on certain items could increase.

Housing: Average annual inflation rate: 2:39%
Housing could be almost 27% more expensive by 2030. That means a house that costs $400,000 today could run you $506,388 in 10 years. Depending on where you are buying in the future, you could be paying much more than that. In fact, by 2030, the average home in Washington state will probably run you $782,708.

Food & Beverage: Average annual inflation rate: 2.33%
Food and drinks may be about 26% more expensive by 2030. That means a trip to the grocery store that costs you $250 now could set you back more than $314. If you like fresh fruit, your grocery bill could climb higher even sooner. That’s because prices for fresh fruit have been rising at about twice the pace of meat, poultry, and fish.

Health Care: Average annual inflation rate: 1.83%
Health care could be 20% more expensive by 2030. That means care costing you $5,000 today could cost you approximately $6,000 in 10 years. In 2021, a retired couple was projected to need $300,000 in savings to cover health care in retirement. In 2030, those costs could rise to over $350,000.

Gas & Transportation: Average annual inflation rate: 1.38%
Fuel and transportation are likely to be nearly 15% more expensive by 2030. That means a car that costs $40,000 now could run you $45,858 in 10 years. However, electric vehicles (EVs) could act as a price disruptor. There could be as many as 145 million EVs on the road by 2030. Plus, some carmakers are working to cut the cost of batteries for EVs in half by 2030. Paired with self-driving technology, the transportation industry could look completely different in the next 10 years.

College: Average annual inflation rate: 4.93%
A public four-year university may be about 62% more expensive by 2030. Annual tuition and fees of $4,000 today for a two-year college could cost $6,324 by 2030. For a four-year public university that runs you $20,000 today, you’re looking at $32,376 within 10 years. A private four-year university cost of $44,000 could increase to $68,022 by 2030. However, the higher education industry is being massively disrupted by virtual learning and changing educational preferences. Within 10 years, these and other factors are bound to change, making higher education costs challenging to predict.

What’s the financial lesson? Inflation is inevitable, so figure out how to take advantage of it. Inflation affects far more than upfront prices. It shakes up the costs of doing business and borrowing money. And it can affect savings, bonds, and plans for the future. We often don’t notice these changes year to year, though. That’s because inflation comes in small doses. A few bucks more here, a couple hundred more there – it creeps up over time. And it’s the reason why inflation has a well-deserved reputation as a “silent killer.”

Still, like many things in life and finances, inflation isn’t all bad. When steady and predictable, a moderate amount can be good as it can signal a healthy, growing economy. Inflation causes problems when it increases suddenly and rapidly. Or when folks haven’t planned for future price increases.

Have questions about how inflation works or what it means for you? We are here to help. Contact us to discuss your financial plan.

The prices and predictions above are based on historical averages going back to 2000 for different areas of spending. Diversification cannot guarantee a profit or protect against loss in periods of declining value. No investment strategy can guarantee success in all market conditions. Investing involves risk including the potential loss of principal. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. For illustrative use only.

Sources:

  1. https://fred.stlouisfed.org/series/CPIHOSSL
  2. https://magazine.realtor/daily-news/2020/10/27/what-will-homes-be-worth-in-10-years
  3. https://fred.stlouisfed.org/series/CPIFABSL
  4. https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings/
  5. https://www.bloomberg.com/news/articles/2021-07-05/consumers-to-get-relief-from-surging-food-costs-in-coming-years
  6. https://fred.stlouisfed.org/series/WPU51
  7. https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs
  8. https://fred.stlouisfed.org/series/CPITRNSL
  9. https://www.cnbc.com/2021/04/29/global-electric-vehicle-numbers-set-to-hit-145-million-by-2030-iea-.html
  10. https://www.greencarreports.com/news/1131589_vw-targets-50-cut-in-battery-costs-by-2030-transition-to-solid-state-tech

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