Five Common Items You'll Pay More for in 2014
NEW YORK ( MainStreet) It's that time of year for resolutions, and many of us want to ring in the New Year by saving more and spending less. But, as always, inflation in 2014 will make that goal more difficult to achieve.
Of course, cost increases won't be spread evenly across all purchases. So, to help the budget conscious among us plan for next year, we at MainStreet have put together a list of five common items where price growth is likely to be particularly steep.
1. College costs
Getting an education isn't cheap, and it's set to get even more expensive in 2014. Over the past two decades, increases in tuition and room and board at private four-year universities and public two-year colleges have been almost double the rate of inflation, according to College Board data. At four-year state schools, the cost increases have been even more dramatic, with tuition rising almost 50% more than at private schools. And costs are likely to continue their climb next year.
The increases have been driven by a plethora of factors, not the least of which is a reduction in state spending on higher education and increases in spending at some private universities in the early 2000s, according to research from the Delta Cost Project at the American Institutes for Research.
One bright spot: students heading off the college increasingly have the option of going to schools with tuition guarantees, which keep costs the same over the four years that a student attends school. About 6.7% of higher education institutions now offer fixed-rate plans, the Associated Press reported.
2. Medical Costs
Medical costs are likely to increase 6.5% this year, well above general rate of inflation, according to a report by PricewaterhouseCoopers. But before you rage about the evils Obamacare is wreaking on our healthcare system, know this: that's actually a lot less than in recent years. Until recently, medical costs were rising by double digits each year. And even in 2013, they rose 7.5%, PWC's report said. PWC credited the increase in availability of relatively inexpensive retail and mobile health clinics, large employers contracting with health systems for expensive procedures, a new federal penalty for wasteful hospital readmissions and an increase in employers offering only high-deductible health plans.
Your grocery bill will likely go up between 2.5% and 3.5% in 2014, well over the 0.75% to 1.25% that it increased this year, according to the United States Department of Agriculture's Economic Research Survey.
But it's not so much that prices are set to rise steeply in 2014, as it is that they rose much less than usual this year. The 2012 drought that ravaged the South and West didn't push up food prices as much as initially expected, and falling agricultural exports, increased imports and a strong dollar held costs down, the USDA said.