Facebook

How To Account for Inflation in Your 2022 Travel Budget -- Part 2

Inflation is crushing almost all aspects of Americans’ budgets — including their vacations. Prices rose on average 8.5% for the past 12 months ending in March 2022, according to the U.S. Department of Labor.  NerdWallet looked at the costs of common travel expenses over the past 10 years using CPI data from the Bureau of Labor Statistics.  We were able to see which pieces of vacation budgets rose and which ones dropped.  Let’s take a look at how those numbers shook out for airfare, travel lodging, rental cars, dining out and entertainment (like movies and concerts).

Airfares are still lower than pre-pandemic prices

One bright shiny light for your travel budget: Airfares haven't fully recovered.  The average cost of airfares in February 2022 was 19% lower than the previous 10-year February average and 15.5% lower than the previous 10-year August average. While the February 2022 price is over 12.7% higher than the average from February 2021, it’s still 16.2% lower than the average of February 2020, which was the last month before COVID-19-related lockdowns in the U.S.

Even leading up to 2020, airfares had been trending downward. The 10-year high was back in 2013, when average airfare costs were nearly 30% higher than February 2022 prices.

This is good news considering that airfare and lodging tend to be the biggest chunks of any vacation budget (and there isn't as much hope for low-cost lodging this year).

Lodging prices are volatile

Hotel pricing is consistently higher in August compared to February, likely due to seasonal travel demand. The price for lodging away from home, including hotels and motels, saw one of the biggest swings of any price category throughout the duration of the pandemic. In December 2020, average hotel prices dropped to their lowest levels since December 2013. Yet it didn’t take long for prices to hit all-time highs. Just seven months later in July 2021, prices had increased 47% to their highest level in the Consumer Price Index.  Fast forward to now, and hotel prices have slightly recovered from all-time highs. Even so, February and March 2022 still recorded all-time highs for their respective months. Given how much seasonality plays into hotel prices, we can expect that the summer months could follow suit. Meanwhile, many hotels are cutting back on amenities including daily housekeeping and room service. Hospitality companies blame factors including high demand, staffing shortages and supply chain issues.

Car rentals have one of the biggest price increases

Rental cars have had one of the biggest price increases, and renters in summer 2021 got especially pummeled. Prices hit an all-time high in July 2021, and while they’ve slightly recovered, as of February 2022 they’re still around 40% more expensive than the previous 10-year average. For data from February 2022, prices are up 24% since the same month in 2021, and they’re up 38.6% since February 2020. At this rate, be prepared for price increases aligned with summer travel demand. You might want to opt out of the rental car altogether this year.

Restaurant spending consistently rises

Food prices consistently rise every year, including in the COVID-19 era. In February 2022, the cost of food away from home is up nearly 7% versus February 2021 and nearly 11% versus February 2020. To that end, foodies on a budget may consider turning to street vendors or fast-casual stops for cheaper meals than sit-down restaurants for their 2022 vacation. Those who have access to a kitchen (say, in a vacation home rental or a hotel suite) might consider stopping by local markets or grocery stores for not just the adventure, but also for the chance to buy ingredients to put together at home.

Entertainment expenditures see price increases, too

There have been some slightly larger-than-average jumps for travel-related leisure expenses.

Like restaurants, entertainment prices see fairly consistent increases — save for a small dip in 2020. Luckily for consumers, price increases here haven’t been as drastic as those for dining out.

In February 2022, the average price for movie, theater and concert tickets is up nearly 5% compared to February 2021 and about 6% compared to February 2020.  Travelers may opt for lower-cost activities rather than paid ones for their 2022 vacation, such as going hiking, checking out free days at museums, aquariums or zoos, playing board games at a brewery or wandering farmers markets.

Planning can minimize inflation's toll on your vacation budget

With airfares still low and rental car prices soaring, perhaps you skip the road trip this year. Fly into a public transit-friendly city like San Francisco, New York City or Boston. If you prefer small-town vibes, ferry to a mostly car-free island like Catalina Island, California, or Mackinac Island, Michigan. Even though airfares cost more on average today than in the pandemic’s early days, you can take some solace in the fact that you’re more than likely saving on airfare this year than you were pre-pandemic.

(Partially reprinted from nerdwallet.com.)

Rates Quick View

Loan Rates (% As Low As)
APR*
Auto 2.75%
Boats 2.75%
Motorcycles 2.75%
Personal Loans 9.00%
Share Secured 4.00%
Certificate Rates (% As High As)
APY*
6 months 0.50%
12 months 0.70%
18 months 0.70%
24 months 0.80%
36 months 0.90%
48 months 1.00%
60 months 1.10%

View All Rates

*APR = Annual Percentage Rate
*APY = Annual Percentage Yield
Rates are subject to change without notice

Newsletter

Newsletter

Read Our Newsletter