Forecast 2009: Your spending

The prediction: Consumer prices will stop rising so fast - and some will fall.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Donna Rosato, Money Magazine senior writer

How 2009 will add up
Average cost for...
A gallon of gas
$3.56
(Same as 2008)
A gallon of milk
$4.02
(Up 5% from 2008)
A notebook computer
$727
(Down 9% from 2008)
Note: prices are projections.
Source:Energy Information Administration; Bureau of Labor Statistics; U.S. Department of Agriculture; Consumer Electronics Association
CDs & Money Market
MMA 0.39%
$10K MMA 0.35%
6 month CD 0.37%
1 yr CD 0.68%
5 yr CD 1.37%

Find personalized rates:
 

Rates provided by Bankrate.com.

(Money Magazine) -- Are you ready for some relief? Here it is: The prices for most stuff you buy won't rise as rapidly in 2009 as they did this year.

Inflation roared back in 2008 - as of September, the consumer price index had risen by 4.5% over the previous 12 months.

But the rate of increase has been leveling off lately, and the slowing economy should help keep inflation in check in 2009.

Talkback: What's your forecast?

In the third quarter of 2008, consumer spending was expected to fall for the first time since 1991 - an inducement to retailers to trim prices in 2009. Most economists expect consumer prices to rise by less than 3% next year.

We're already seeing those forces play out in the price of oil. Concern about a weakening global economy has pushed prices down from a record high of $147 a barrel in mid-July to about $65 a barrel today. Goldman Sachs forecasts that oil will gradually climb to $107 a barrel by the end of 2009.

Still, the Energy Information Administration predicts that the price of gas will likely remain even with the 2008 average ($3.56 a gallon) and that the price of home heating oil will likely go up by only a few cents (to $3.80 a gallon).

One area where you won't find much relief is food prices, which surged about 6% in 2008. Economists forecast a more moderate 4% to 5% rise next year.

That's because while transportation costs and world demand will likely ease, low levels of farm inventories, including wheat and corn, will keep the cost of feed high.

The wild card
  • The price of oil

As we mentioned, trouble in the Middle East could send it skyrocketing once again - taking the price of gasoline and home heating oil with it.

The action plan
  • Negotiate

When times are tough, consumers gain bargaining power. More than 70% of Americans have managed to finagle a better deal on a purchase in recent months, according to America's Research Group - a 14-percentage-point jump from a year ago.

So try to negotiate better rates on your credit card and lower prices on everything from your cell phone to your health-club membership.

  • Track your spending

If you need a better idea of where your money is going - and who doesn't these days? - try a free budgeting site like Mint.com, which makes it easy to build and follow a spending plan.

  • Cut your home energy bills

Make your home more energy-efficient with better-quality windows, doors, insulation and siding. For a list of home improvement tax credits in 2009, go to energystar.govTo top of page

Send feedback to Money Magazine
Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
50 years of the Ford Mustang Take a drive down memory lane with our favorite photos of the car through the years. More
Cool cars from the New York Auto Show These are some of the most interesting new models and concept vehicles from the Big Apple's car show. More
8 CEOs who took a pay cut in 2013 Median CEO pay inched up 9% in 2013 to $13.9 million. But not everyone got a bump last year. Here are eight CEOs who missed out. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.