Rising Inflation is Causing More Homelessness

Posted by Matin Varshochi in EconomyJuly 29, 2022(Last Updated December 9, 2022)3 min read
Key Takeaways
  • Since the beginning of the COVID-19 pandemic, inflation has continued to increase on products and services. 
  • Inflation has made it harder for people to afford basic necessities, especially housing accommodations.
  • Due to the rising cost of living, many Americans have increased chances of getting evicted and becoming homeless.
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Since the beginning of the pandemic, the cost of living has continued to rise due to the surging inflation rates. When the Bureau of Labor Statistics calculated the most recent inflation rate using the Consumer Price Index, it was determined that it was at its highest level in 40 years

As a result of the surging inflation rates, many people are becoming worried about whether their current income will be enough to survive. Rental inflation has also become a barrier for people to survive on their income alone, causing homelessness for many. Statistics show that the number of homeless people throughout the United States is expected to rise. 

Recommended Read: The U.S. Inflation Rate is at Its Highest Since 1990

What is the Consumer Price Index (CPI) 

When the Bureau of Labor Statistics wants to measure inflation for the past year, they calculate it using the Consumer Price Index (CPI). CPI is calculated by determining the total price for a basket of goods from a base year.


After, the same products and services will be calculated using today’s prices. The difference between the two years is divided by the initial year's cost. The value calculated is the inflation rate, and the higher number, the more prices have increased. 

As of June 30, 2022, the inflation rate for the United States economy is 9.06%. On average, the U.S. average inflation rate has been 3.8% for the past 60 years, so a rate of 9.06% is abnormally high. 

Main Factor Behind Rising Inflation Rates

Since the beginning of the pandemic, several events have resulted in a high inflation rate. However, the main factor that began the wave of high inflation was the implementation of COVID-19 relief packages. As there was a severe reduction in economic activity when the pandemic hit, the central banks decided introducing relief measures would help stimulate the economy and prevent a recession

The issue arose when the Federal Reserve did not have enough money to distribute the funds required. As a result, the federal government began printing more money so they could accommodate everyone’s request for financial relief during the crisis. The major downside of this decision was that the value of the United States dollar began deflating as more and more money was put into the economy, leading to higher inflation rates. 

Inflation Statistics

In comparison to 2022’s inflation rate, two years ago, on June 30, 2020, the inflation rate was only 0.65%. The vast difference between the inflation rates only two years apart showcases how much the general price level has increased significantly in a short period of time.


woman stressed


Despite the high inflation rates, a recent survey found that U.S. corporations are increasing their employees’ wages by an average of 3.4%. As wages are not rising the same amount as inflation, it has brought up many concerns. When the raised wages are less than the inflation rate, it means many people’s income levels will be worth less with the higher expenses, so they will be affording fewer items than before.

Financial Impact of the Current Economic Climate 

The surging rates of inflation mean the cost of living will also rise, making it difficult for the average person to find housing. The Department of Housing and Urban Development recommends renters should be looking to spend up to 30% of their monthly income on a place to stay. However, despite the Department of Housing and Urban Development recommendation, the Guardian believes the lowest-earning 10% of the population would have to spend around 55% of their monthly income on housing. 

Since low-income Americans will have to spend more than half their monthly income on housing accommodations, the consistently rising prices may eventually lead to homelessness. A survey conducted by the U.S. Census Bureau found that 30% of the respondents were three or more months behind on their rent payments.

Recommended Read: The Cost of Rent Has Gone Up in Many Cities

The data from this survey shows that in the current economic climate, 30% of renters are struggling to pay their living expenses on time. As costs are expected to rise, even more, it means an increasing number of renters may be experiencing financial pressure. Once they cannot pay their living expenses, they may become homeless.  

The Money Wrap-Up


The current financial crisis many households are experiencing is tough to see. No one knows the timeline until costs will stop rising at a rapid pace. But if these conditions continue to exist, many more Americans can face complications when it comes to finding an adequate housing situation.


Main Image Credit: image_vulture / Shutterstock.com

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