Every now and then, an infrequent purchase comes up.  This week a power supply on one of our desktop computers died with a big popping noise.  It’s an easy swap, 4 screws and a couple of snap connecters – a less than 10 minute process.  I ordered one at the end of the day and it arrived at lunchtime the next day.

The new one cost $31.99.  In my head that was considerably more than the last one we had purchased.  I was right.  The last time we purchased one, it was $24.99 in January 2019.  That’s an increase of 28% in 4.5 years.  The first two of those years were in a lower inflation period.  It works out to an average annual increase of 5.6% – likely much more since 2021 started.  This is a commodity item that hasn’t changed (same wattage, and certainly no new patents apply). 

Purchases like this make it clear that inflation is running hotter than the official statistics the government puts in front of us.  It seems clear that for the foreseeable future, we are going to have to adjust to the new normal.  This is a reminder to adjust inflation assumptions in your Financial Planning.

The Bottom Line:  Incorporate the real world in your Financial Planning.

–Michael Ross, CFP®