The Impact Of Inflation

Posted by Richard on October 11, 2021

Suppose it is 1950. You have $5 in your pocket and you have to buy groceries. You’ve got plenty:

Gallon of milk: 83 cents
Dozen eggs: 60 cents
Loaf of bread: 30 cents
Chopped beef: 53 cents
Frozen green beans: 24 cents
Apples: 39 cents
Peanut butter: 29 cents
5lbs potatoes: 26 cents
3 lbs. hamburger: 89 cents
2 lbs. cabbage: 12 cents
1 lb. bacon: 35 cents
Total: $4.80

If you lived in any of 10 states, there wasn’t a sales tax, so you could pocket that 20 cents.

Today, you aren’t going to make much of a dinner with your $5. You can buy bread for $2 and eggs for $1.54. Five pounds of potatoes cost about $3.
Of course, today you should have more than $5 in your pocket, because wages eventually rise with inflation.
The exception: Anyone who lives on fixed savings. For them, inflation can lower their standard of living. That’s why when you retire, your savings and investments have to keep up with inflation.

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