How inflation could affect borrowing, saving and even volunteering

Inflation obviously involves spending challenges. Rising prices mean consumers might need to shop more carefully, pare back on purchases and still face higher bills for food, shelter, gasoline, appliances, vacations and other purchases.

With U.S. inflation now running at an annual pace of 8.6%, a four-decade high, the topic has taken on more urgency.

Most economists expect inflation – which has already hammered consumer budgets and quickly shifted spending patterns – to linger. The national average for a gallon of regular unleaded is expected to hit at least $6 this summer.

Rising inflation also can influence your borrowing, saving and even volunteering patterns. Here are some of the less-obvious ways that some people are feeling it.

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Volunteers feel the pinch

Thousands of nonprofit groups rely on volunteers for all sorts of help, but higher inflation – specifically, surging gasoline prices – is taking a toll.

One Scottsdale, Arizona-based nonprofit, Waste Not, arranges delivery of unused or excess prepared foods from caterers and restaurants to individuals who need help. The group relies on volunteers using their own cars and trucks to pick up food from donors and deliver it to other nonprofits for distribution to the hungry in and around the Phoenix metro area.

But as gasoline prices have surged, volunteer help or engagement has dropped. Volunteer drivers accepted 40% fewer food-pickup assignments in April compared with a year earlier, said Lori Calhoun, manager of communications and engagements for Waste Not. In many cases, the nonprofit found backup drivers but some food has gone to waste, she said.

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Fuel costs have stoked the inflation surge. This station in eastern San Diego County recently showed prices above $7 a gallon.

Volunteers don’t get much help from the government, either. People who use their vehicles in the service of charities may deduct mileage costs on their income tax returns, but this relief is limited. Volunteers may use this tax break if they itemize deductions. However, most taxpayers don’t itemize, opting to take the standard deduction instead.

Besides, the deduction for volunteering is just 14 cents a mile – a rate that hasn’t budged in more than a decade and won’t change anytime soon. That’s well below the deductible rate for business use of a personal vehicle of 58.5 cents a mile that will rise to 62.5 cents on July 1. It also trails the 18 cents a mile that you can deduct if using your car for medical (and some moving) purposes. That rises to 22 cents on July 1.

Living closer to the edge

Even before this latest inflationary burst, millions of Americans were scraping by. Rising prices for gasoline, shelter, groceries and more has made it harder for people to build up a cushion for emergencies.

Many consumers said they would have trouble meeting a surprise $1,000 expense using cash on hand or in a savings or checking account, according to a new survey by Freedom Financial Network, which has a large operation in Tempe, Arizona. Only 28% of respondents said they could meet an unanticipated big expense from an emergency savings account. Other common responses included putting the expense on a credit card (32%) and borrowing from family members or friends (18%).

Other options included taking out a personal loan, selling items to raise cash, cutting costs and taking on gig jobs or other extra work. Some people cited multiple options.

Financial advisers generally recommend building an emergency fund capable of meeting three to six months of routine expenses. In an inflationary environment, socking away even more money could be wise.

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More reliance on credit cards

Many Americans seem to be altering credit card usage in response to higher inflation, partly to handle higher expenses.

Because of inflation, 32% of respondents in a recent NerdWallet survey said they have used a card within the past year or so to pay for essential purchases, but haven’t yet paid off the debt. Another 26% have relied on cards to make essential purchases between paychecks, and 25% said they have redeemed card rewards to pay for essential purchases because of inflation. About 1,600 people were polled.

Other ways people have changed their behaviors include taking out a loan from a credit card company, opening a new card account or taking advantage of balance-transfer offers. The latter can provide you with a year or more of interest-free use, but applicants generally don’t qualify unless they have good or excellent credit, said Sara Rathner, a NerdWallet card expert.

Periods of rising inflation and interest rates hikes, like now, can be good times to evaluate your credit card’s features and make changes if you can find better deals. Such features include interest rates, fees and rewards.

“Credit card interest is variable, not fixed, so if interest rates go up, your debt becomes even more expensive,” Rathner noted.

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Tipping takes a slight inflation hit

Americans apparently aren’t tipping quite as much as they used to, and inflation might partly be to blame. About 73% of patrons at sit-down restaurants said they always tip servers, according to a new survey by, but that’s down from 75% in a similar survey last year and 77% in 2019.

“Inflation is cutting into consumers’ purchasing power,” said Ted Rossman, a senior analyst at Also, “A tight labor market has left many service-industry businesses understaffed and struggling to provide top-notch customer experiences.”

Compared to the 73% of respondents in the latest survey who said they always tip, 23% said they tip sometimes or most of the time, and 4% said they never tip.

Baby boomers and Gen Xers generally report tipping more often than younger adults. Women said they tip more than men – 78% to 68%. Also, more affluent people said they tip more often.

Between 2019 and 2022, said its surveys showed slightly fewer respondents tipping food deliverers, taxi drivers and baristas, but slightly more people tipping hairstylists and barbers.

As a rule, recommends tips of 15% to 20% for restaurant servers. The report offers other tip suggestions in different situations.

Checking quantities becomes critical

Grocery items continue to rise in price, and many suppliers have responded by cutting package sizes. Passing along price increases indirectly in this manner is known as shrinkflation, and it seems to be accelerating.

Product manufacturers “know that most shoppers are not net-weight conscious and thus less likely to notice the change,” said Edgar Dworsky, who as founder of Consumer World has been tracking downsizing for decades.

Recent downsizing examples that he cited include Angel Soft toilet paper, Post Honey Bunches of Oats cereal, Kleenex tissues, Miracle-Gro plant food, Quaker Life cereal, Pedigree dog food, Dawn dishwashing liquid and Arm & Hammer detergent.

Dworsky and the Consumer Federation of America offer tips for dealing with shrinkflation, including: Focus on the price per unit of food (such as the price per ounce), substitute generics for national brands, stock up on items when prices are low, use cellphone apps for quick rebates, and scour weekly ads before visiting stores.

Prices for food consumed at home jumped 10.1% over the 12 months through May, surpassing the nation’s overall inflation rate of 8.6%.

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Contributing: Medora Lee

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