Sizing the Uptick

Exactly how much will your gas and food costs rise?

We all know inflation has been a big financial punch in the stomach, with food costs up 5% and energy up 29%. But how much will those increases cost you in actual dollars spent? $500?

Would you believe that households earning over $100,000 will pay an additional $1,300 a year for gas alone? In a moment, more real numbers based on your income level.

But first let me tell you how I got to those numbers. A recent Wall Street Journal story underscored that many common household costs are increasing, but here's what was really cool about the article: The authors took the Bureau of Labor Statistics' average consumer expenditures from 2006 and brought them forward using the latest inflation figures. The result is a line-by-line estimate of what an average household spends today on key categories such as food, motor fuel, health care, and housing.

I liked the idea so much I carried it a step further. Here's a 15-minute benchmark for what today's inflation might mean for your household spending in dollars. And just as importantly, how much that spending might increase in coming months.

I created three tables. The first shows a projected compounded inflation rate for the two years 2007-2008, using 2007 seasonally-adjusted inflation figures already observed for the first three months of the year.

Estimated 2007-2008 Inflation Rate

Source: Bureau of Labor Statistics, April CPI release

The second table projects spending levels to the end of 2008. These are annual figures and, since inflation doesn't happen all at once, may not exactly reflect reality. I included figures for three household income levels:

Estimated Annual Household Expenditures, End of 2008

Source: Calculations from 2006 Consumer Expenditures Survey, all urban consumers

Finally, for most of us dealing with the inflation uptick, here are projected average increases by category from 2006:

Change in Estimated Annual Expenditures From 2006

Source: Calculations from 2006 Consumer Expenditure Survey, all urban consumers

Making the Adjustments

You can, of course, draw your own conclusions. Here are a few for starters:

• The inflation rate for energy far outpaces the others, but you already knew that. More to the point: You'll cough up another $1,000 or so, depending on your income, for gasoline and $700 or so for utilities. Ouch.
• Housing is big, too. Even though home prices and rents are on the decline in some markets, you'll take a hit on overall housing costs, including interest expense, taxes, maintenance and insurance.
• And food, of course: Another $800 to $1,000, and that's if current inflation estimates hold. I think we could be in for an unpleasant surprise here, though.

Use these figures to see where you are compared to the crowd -- and where you're headed. They are national averages so you may experience something else depending on where you live.

Painful as they may be, the real numbers can help you know where you're going.

Peter Sander contributed to this article.

Jennifer Openshaw is the author of "The Millionaire Zone" and CEO of Family Financial Network. She hosts ABC Radio's Winning Advice and serves as an adviser to some of America's top corporations. You can reach her at jopenshaw@themillionairezone.com.