The Consumer Price Index, which monitors costs for things such as travel, groceries, clothing, and automobiles, had the highest inflation level since December 1981 in March 2022.
Annual inflation rates are a popular approach to analysing economic developments. When comparing 2022 inflation data to 2021 inflation data, it’s vital to remember how unusual last year was. Many people’s work schedules were altered or shortened in 2021, and daily activities came to a halt as a result of ongoing closures at bars, restaurants, and gyms. Travel, especially foreign travel, was challenging. However, given the low demand, travel was often quite inexpensive.
Don’t focus on averages
Using the average for holiday budgeting might be hard because your personal travel choices frequently affect your overall cost.
Travel styles vary greatly, and you can’t always base your personal budget on a hazy average derived from travellers with diverse preferences. Rather than comparing your expenditure to survey averages, it may make more sense to utilise your travel budget from previous trips and modify based on current inflation rates.
Expect to pay significantly more now, especially if you’re planning your next holiday around a trip in 2021. However, as compared to pre-pandemic travel, some prices may rise at roughly the same rate — and one big travel expense may be less expensive.
Using CPI data from the Bureau of Labor Statistics, NerdWallet examined the expenditures of common travel expenses over the last ten years. We were able to see which parts of vacation budgets climbed and which parts fell by analysing February’s inflation figures and comparing them to August data from the same year to account for seasonality.
Hotel rates are regularly higher in August than in February, most likely due to seasonal travel demand.
During the pandemic, the price of lodging away from home, including hotels and motels, fluctuated the most of any pricing category.
Average hotel prices in December 2020 will be the lowest since December 2013. However, it did not take long for prices to reach all-time highs. Prices had risen 47 per cent to their greatest level in the Consumer Price Index just seven months later, in July 2021.
Fast forward to now, and hotel costs have just begun to recover from their all-time highs. Nonetheless, February and March 2022 set all-time highs for their respective months.
Car rental rates
Rental automobiles have seen one of the steepest price rises, with renters in summer 2021 being particularly hard hit. Prices reached an all-time high in July 2021, and while they’ve marginally recovered, they’re still roughly 40% higher than the previous 10-year average as of February 2022.
Prices in February 2022 are up 24 per cent from the same month in 2021, and up 38.6 per cent from February 2020. At this rate, expect price hikes in line with summer travel demand. This year, you might want to avoid renting a car entirely.