Transcripts

"Money File"-Price Panic

SUSIE GHARIB: In the money file tonight, prices are rising at the pump and at the grocery checkout, but Chuck Jaffe says there's no need to panic. He's senior columnist at Marketwatch.

CHUCK JAFFE, SENIOR COLUMNIST, MARKETWATCH: American consumers were supposed to be cheered last week by news that consumer prices, excluding food and energy costs, barely went up in April. And that would be good news, if we didn't have to eat anything or drive anywhere. But in the real world, consumers are staggered by just how hard the economy is hitting their day-to-day budget. A recent AARP study showed that 81 percent of Americans aged 45 and up are now taking steps to ride out the economy's troubles, protective measures that include everything from cutting back on medications to shrinking retirement savings contributions, from postponing the payment of some bills to putting off retirement altogether. Some of those decisions could have disastrous consequences. Consumers need to avoid being caught in the disconnect between CPI numbers, which indicate that average inflation is not so bad and the gnawing feeling they get at the cash register, which says that they're not the average person and that their standard of living is about to start slipping. Rather than a knee-jerk reaction to feeling pinched, consumers need to re-examine their budget and their habits with an eye toward keeping their standards high while minimizing waste and inefficiency. No matter whether the news on the CPI is perceived as good or bad, consumers need to make sure that they don't turn ordinary inflation into personal desperation. Inflation should always be factored into savings and spending plans. It may be higher now than in recent history, but it's far from panic stage. That was last week's good news. I'm Chuck Jaffe.