The price of fun: Inflation comes for travel, food & movies

Welcome back to MoneyNerd! A fresh inflation surge strains planes and automobiles — and generally puts a chill on summer fun. Staycation, anyone?

We dive into:

By Anna Helhoski

By next weekend — Memorial Day weekend, in case you forgot — millions of Americans will face not only crowded highways and packed airports, but exceptionally high travel costs along the way. 

The latest inflation data in the consumer price index (CPI) released on Tuesday showed staggering increases in airfares (up 20.7% annually) and gasoline prices (up 29.2% annually for unleaded regular fuel). 

The primary culprit is, as expected, the Iran war. The conflict has rippled beyond the region by spiking oil prices, whipsawing energy markets up and down, and increasing overall inflation. The CPI report shows annual inflation grew 3.8% in April, up from 2.4% in February before the war began. The Wall Street Journal reports that inflation growth is outpacing hourly wage growth, resulting in a 0.3% decline in real hourly earnings. 

Unless a resolution is reached soon, travelers are likely to feel the squeeze of high costs all summer long and into the fall. 

Jet fuel price hikes are hitting airlines hard, and they’re passing on costs to customers.  

Reading the tea leaves, I panic-booked flights for a summer trip shortly after the Iran war began. My anxiety only heightened when Spirit Airlines folded and a colleague who writes about travel advised me to book a separate refundable flight in case the European budget airline I booked for one of my flights were to go belly-up.   

This week’s data shows my nervousness was probably warranted. April’s airline fare price hike is the single largest annual gain in any major CPI category outside of energy, which is up 17.9% overall in the past year. And, of course, energy spikes are the main reason why airline fares are up. 

The lesson here is if you need to book flights for summer travel, don’t just wait and assume the war will end and prices will fall. Even if oil prices come down, it will likely take several months for those reductions to work their way through the airline supply chain. And if demand stays high, airlines aren’t incentivized to lower prices either.  

In other words, now is the time to move forward with booking or step back and rethink travel since prices will only move higher as the conflict wears on and demand peaks. 

Hitting the road has long been the cheaper option when it comes to summer travel, but rising gas prices are eroding that advantage this year. 

Americans are facing the highest gas prices in four years. As of this writing, gas prices are averaging more than $4.50 a gallon, with the highest peak of $6.15 in California, according to AAA. 

That squeeze at the pump is forcing travelers to rethink not just how far they drive, but whether they hit the road at all (in which case, a staycation may be in order). 

Combine a shaky ceasefire, a standoff in the Strait of Hormuz and collapsing negotiations, and it’s unlikely that oil prices will come down anytime soon.  

Public opinion of President Donald Trump’s economic performance is waning. A new CNN poll conducted by SSRS found that 77% of Americans say that Trump’s policies have increased their cost of living. And Trump’s approval rating when it comes to the economy is at just 30%. Further, just 1 in 4 Americans approve of his performance on inflation and 21% approve of his handling of gas prices. 

Compounding affordability issues are growing public concerns about the stability of the economy and record-low consumer sentiment. Together, those pressures are intensifying political pressure on Trump to either deliver financial relief for Americans or pursue a compromise with Tehran that could end the conflict.

The latter appears unlikely. On Tuesday, Trump was asked by a reporter “To what extent are Americans’ financial situations motivating you to make a deal?” 

He responded, “Not even a little bit. The only thing that matters when I’m talking about Iran — they can’t have a nuclear weapon. I don’t think about Americans’ financial situations … I think about one thing: We cannot let Iran have a nuclear weapon, that’s all.” 

There’s little certainty about what comes next, but much of it remains in Trump’s hands, and it’s unclear how he’ll respond to growing pressure as the war continues.

- Anna Helhoski

We're listening! If you have an idea for something you'd like the MoneyNerd team to cover, drop us a line at [email protected]. And thanks for subscribing!

By Kate Ashford

Gas and airfare are not the only prices surging at the moment. Grocery prices saw a 0.7% jump from March to April, with beef prices resuming their record climb and tomatoes climbing 15.1% in a single month — and 39.7% in the past year, according to the latest CPI report. 

With higher prices making shoppers anxious, we took a deep dive into Reddit sentiment to see how people are making food shopping more affordable. We used an AI tool to help analyze and summarize responses. People post anonymously, so we cannot confirm their individual experiences or circumstances. 

Here are some common strategies:

Get more tips on frugal grocery shopping here. 

By Karen Gaudette Brewer

It’s almost summer, and I’m facing a familiar challenge: how to take my kids to all the new movies they want to see without blowing our budget.

There are at least eight movies on our list between now and late summer — a big jump from the one movie per month I usually allow (no $50 movie ticket purchases in this family!). We live close to an AMC cineplex and a Regal, so I checked NerdWallet’s tips for getting cheap movie tickets. Being the Nerd I am, I intended to build a spreadsheet to compare options. Instead, I tried something faster: I asked Claude, an AI assistant, to do the math.

Here’s the prompt I used:

Hi there, Claude! I want to see eight movies over the next three months. I want to spend as little as possible. Is it a better deal to 

a) join AMC's A-List program for three months 

b) buy discount AMC tickets at Costco 

c) buy discount tickets at Costco and use them on half-price Tuesdays and Wednesdays

d) join Regal's movie club? 

A few minutes of web searches and analysis later, and … Well, I wrote all about what happened. Read my full experience (complete with my AI prompts and screenshots of Claude’s answers).

The bottom line? After lots of back-and-forth, we brought what would have been $456 total for our family of four to see eight movies down to $267, plus whatever snacks the kids wheedle out of us.

Here are my Nerdy tips for using Claude to do shopping math: 

What does it really mean when economists say the U.S. economy has shifted from a K-shape to an E-shape, and where do middle-class households fit in this new picture? Hosts Sean Pyles and Elizabeth Ayoola talk with senior news writer Anna Helhoski about why middle-class earners are increasingly slipping from the top of the K to the middle of the E, what new data reveals about families struggling to afford basic necessities in their own metro areas, and how spending patterns are shifting as essential costs eat up more of each paycheck.

Watch the full episode on Spotify or get the audio version.

Your MoneyNerd team: Courtney Neidel, Anna Helhoski, Rick VanderKnyff.

Was this newsletter forwarded to you? Subscribe here.

See all of NerdWallet’s newsletters here.