Inflation rate hits biggest spike since 1981
By WVUA 23 News Reporter Mackenzie Wanicka
In each of the past five months, the U.S. has set a new record for rising inflation, and now it’s close to hitting rates not seen in 40 years.
In December 1981, inflation was 8.9%, but that was coming off even higher rates set in the previous years. In 1977, inflation was reported at 13.3%, so the sub-9% figure was good news.
In March 2022, the inflation rate was 8.5%, meaning Americans are feeling the squeeze more than they have since Ronald Reagan was president.
Alabama One Credit Union Wealth Advisory Director Tyler Foster said no matter what your net worth, you’re probably experiencing some sticker shock.
“For us, everyday usage would be oil,” Foster said. “Oil is actually down a pretty good bit. Housing has also been something that’s also inflated if you look at it. Rates are starting to come up, which is typically negatively correlated with housing. When rates go up, housing prices come down. But we haven’t seen that yet.”
Alabama One Chief Lending Officer Jason Halperin said these soaring rates will affect the cost of a mortgage drastically, as the 2.5% to 3% loan rates for those with decent credit are now a thing of the past.
“When inflation hits, it probably affects mortgage rates quicker than other areas of lending,” Halperin said. “We’ve seen mortgage rates go up almost 2% in the last six months.”
In previous times of inflation, rising interest rates led to cheaper houses. But that’s not the case right now.
“Inflation means the value of the dollar is depreciating, so generally we would see is the value of house prices going down,” Halperin said. “But here in Tuscaloosa, because of the shortage of housing, we haven’t even seen house prices going down. So right now consumers are being hit with much higher interest rates and the value of houses is still at all-time highs for Tuscaloosa.”
That means home buyers are paying more for their homes and more for their mortgages, meaning fewer people than ever can afford a home. Not to mention, most employees aren’t getting an 8.5% pay raise this month, meaning their hard-earned paycheck isn’t going as far as it did even a few weeks ago.