Although this year’s inflation is far lower than the peak in June 2022 when the Consumer Price Index (CPI) reached a 40-year high of 9.1%, millions of Americans are feeling increased pressure on their finances due to the long-term rise in prices of essential goods such as health foods, housing, and healthcare bills, leading to concerns about their financial well-being.
This affordability crisis stems from long-standing economic issues (dating back decades) as well as recent events. For example, part of the reason for the surge in housing costs is due to a shortage of housing supply, a result of the construction industry contracting after the Great Recession. Additionally, recent significant tariff increases in the United States have also had an impact on inflation.
According to a survey conducted in October by the Columbia Broadcasting System (CBS News), inflation and economic issues are currently the top two concerns for Americans.
Here are the five major expenses causing financial stress for many Americans.
Although food prices are still on the rise, the rate of increase has significantly slowed down. The latest Consumer Price Index (CPI) report shows a 2.7% year-on-year increase in food prices in September, sharply contrasting with the 11.4% increase seen in 2022. However, according to CBS price tracking data, as of September, overall food prices were more than 18% higher than in January 2022.
Moreover, consumers assess the cost of food differently from economists. Research from the University of Florida shows that consumers are more concerned about daily expenses, which have been steadily increasing.
In other words, people’s experience of inflation and how they measure it in their daily lives may not align with the more optimistic picture painted by official economic indicators.
Meanwhile, Purdue University’s food demand analysis data indicates that approximately 14% of American households faced food shortages between January and October this year, up from 12.5% in 2024.
A survey conducted by YouGov and the University of Florida’s Center for Public Interest Communication in October revealed that nearly three-quarters of Americans feel that housing in their communities has become increasingly unaffordable in recent years.
Data confirms this trend. The Federal Reserve Bank of Atlanta’s data shows that today, a buyer would need an annual income of $121,400 to afford a median-priced home, while the average American earns about $84,000 per year, highlighting the significant gap between income and housing prices.
Multiple factors have contributed to rising home prices. Following the 2008-2009 financial crisis, the pace of home construction plummeted, resulting in a shortage of housing inventory. Goldman Sachs estimates that an additional 4 million homes need to be built on top of the current construction levels to meet current housing demand.
During the pandemic, buyers could secure mortgage rates below 3%, sparking a buying frenzy and driving up prices. Even though prices have slightly dropped this year, current home prices are still about 25% higher than in 2019, while mortgage rates have more than doubled since the pandemic’s lows.
Childcare costs are another major challenge for many families. Data from Child Care Aware America shows that in 2024, the average annual childcare cost for a child in the United States exceeded $13,000, a 30% increase from 2020.
According to the U.S. Department of Labor, if a family has only one child, full-time childcare costs could account for 9% to 16% of their median income. This means that parents often spend more on childcare than on other expenses like food or rent.
Experts point out that the rise in childcare costs is partly due to a shortage of early education workers, who are unable to meet the needs of all children in care, and the industry’s low wages further amplify the difficulty of recruiting new staff.
Americans are struggling with the continuously rising medical expenses, which include higher insurance premiums and out-of-pocket expenses. Mercer reports that the increase in medical costs is mainly driven by the emergence of costlier treatments, such as the popular GLP-1 weight loss drugs, and an aging population leading to increased healthcare needs.
Mercer states that employees enrolled in medical insurance plans provided by employers could see healthcare costs rise by as much as 7% in 2026.
According to a new report jointly released by The Century Foundation and Protect Borrowers, Americans are now spending an average of $265 per month on utilities like water, electricity, and gas, a 12% increase from last year.
This surge in electricity prices is due to price hikes across the United States as electricity demand exceeds supply. A recent report from PowerLines shows that in 2025 alone, over 124 million Americans are expected to see some form of increase in their energy bills.
Even with efforts to turn off all lights, some fixed costs cannot be avoided, such as the so-called “transmission fees,” which are the costs incurred by power companies to transmit electricity from power plants to users’ homes.