As Americans suffer the severe economic consequences of soaring inflation, the average U.S. household will have to shell out about $3,500 more in 2021 in order to match their consumption levels from prior years, according to an analysis by the Penn Wharton Budget Model.
"We estimate that inflation in 2021 will require the average U.S. household to spend around $3,500 more in 2021 to achieve the same level of consumption of goods and services as in recent previous years (2019 or 2020)," the analysis notes.
Such a massive financial burden demonstrates the dramatic ramifications of rising inflation.
"Moreover, we estimate that lower-income households spend more of their budget on goods and services that have been more impacted by inflation. Lower-income households will have to spend about 7 percent more while higher-income households will have to spend about 6 percent more," the analysis says.
According to the U.S. Bureau of Labor Statistics, the consumer price index shows significant price increases over the last year, marking the biggest 12-month jump in nearly four decades.
"The all items index rose 6.8 percent for the 12 months ending November, the largest 12-month increase since the period ending June 1982," according to the BLS. "The index for all items less food and energy rose 4.9 percent over the last 12 months, while the energy index rose 33.3 percent over the last year, and the food index increased 6.1 percent. These changes are the largest 12-month increases in at least 13 years in the respective series."