Since 2020, U.S. inflation rates have soared higher than at any point in the last four decades, reaching as high as 9.1 percent in June of 2022. This growth has slowed over the last year; however, September 2023’s rates were still at 3.7 percent.
Prior to the COVID-19 pandemic, the annual rate of inflation was 1.8 percent.
The causes of the past few years’ high inflation rates can largely be traced back to the COVID pandemic. The global issue of supply chain bottlenecks during the pandemic are slowly beginning to ease, and the labor market is also slowly correcting itself. The high wages employers offered in an effort to entice employees back to work are evening out, and the labor demand and labor supply are incrementally coming back into balance.
Shelter is the largest contributor to the current inflation rates, accounting for over half the overall increase. The gasoline index also rose, followed by energy and food rates. Residents of all income levels are forced to adjust their spending in these critical areas, but those families considered low- to middle-income, or LMI, are being hit hardest.
While residents across all income groups reported shopping at different stores with lower prices, eating at restaurants or ordering in less often, and delaying major purchases, the LMI group indicated they are also purchasing less fresh fruit and meat, lowering their utility usage, asking friends and family for help, and accepting benefits from charities.
Adding to this is inflation inequity, the gap in inflation rates between rich and poor individuals. While all groups cut down on luxury goods, LMI families spend most of their household income on necessities such as food and heat. When the prices of those critical items rise, these residents are more affected as they spend more to maintain the same lifestyle.
But what happens when an LMI household is hit by an economic shock, or large, unexpected expense?
Even before this crushing inflation growth, 11.5 percent, or nearly 40 million Americans, were living in poverty. More than 20 million live in severe poverty with an income of $13,740 or less for a family of four.
According to the Federal Reserve Bank of St. Louis, 85.7 percent of individuals earning an annual income of less than $50,000 reported that they are “significantly stressed” by the rising prices. Across all demographics, 57 percent of U.S. adults are uncomfortable with the amount of emergency savings they have put aside, while 22 percent have no emergency savings at all to weather an economic shock like a broken water or sewer line.
As a municipal official, there’s very little, if anything, that can be done to help these residents.
This is where the NLC Service Line Warranty Program can help municipal officials shield their residents from the financial shock of an unexpected home repair that impacts their daily quality of life. The program prepares residents by educating them about their service line responsibilities in tandem with partner communities, at no cost to the municipality. In addition, the program offers a completely optional warranty program at an affordable price.
Plan holders have access to a repair hotline 24/7/365 and a nationwide network of pre-vetted, licensed and insured contractors. When a plan holder has an issue, they make one call, and the program dispatches a qualified contractor to their home. There are no call-out fees or deductibles, and the program pays network contractors directly, so there is no need for the resident to pay out of pocket and wait for reimbursement.
To learn how municipalities and the program can work together to shield residents from yet another unexpected expense, contact us.