Friday, October 30 · thedime.news/issues/2026-10-30/

Prices are up 3.6% in a year. Gas costs about $1.20 more

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The government's latest report on inflation says prices rose 3.6% in the year through September, measured by the personal consumption expenditures (PCE) price index. Inflation means the same things cost more than they did before. On Thursday, the report matched what economists expected, so the number was not a surprise. It still means prices are climbing faster than the 2% a year the Federal Reserve aims for.

You can see it at the gas pump. AAA says regular gas averaged about $4.27 a gallon on October 27. At this time last year it was about $3.07. That is roughly $1.20 more per gallon, which hits anyone who drives to school, to work or to a friend's house.

Your money: A raise only counts if it beats inflation

Say you earn $15 an hour. If prices rise 3.6% over a year, the same things that cost $15 now cost about $15.54. To keep your purchasing power, which is how much your money can buy, your pay has to rise by at least that much.

Here is how to check. Multiply your wage by 1.036 (that is 100% plus 3.6%). $15 × 1.036 = $15.54. If your raise takes you to $15.30, you got a raise on paper, but you can buy less than before.

When you start a job or ask for a raise, compare the percent raise to the inflation rate. A 5% raise in a year with 3.6% inflation is a real gain of about 1.4 percentage points. A 2% raise in the same year is a pay cut in what your money can buy.

Words to know

Write what each word means in your own words.

1. Inflation
2. Purchasing power
3. Comparable sales

Questions

The story

1. In one sentence, what happened in the top story?
2. If you earn $15 an hour and prices rise 3.6%, how much would your pay need to rise to keep up? What would you cut if it did not?

Do the math

3. Gas costs about $1.20 more per gallon than a year ago. About how much more does it cost to fill a 12-gallon tank? Show your work.

Your turn

4. You earn $12 an hour at a movie theater. Prices rise 3.6% over the next year. What hourly wage do you need to keep up? If your boss gives you a 2% raise, what is your new wage, and are you ahead or behind?

Quiz

5. You earn $20 an hour and prices rise 5% over a year. About what hourly wage do you need to keep your purchasing power? Circle one.
   1. $20.50
   2. $21
   3. $22
   4. $25

What do you think?

6. Gas costs about $1.20 more per gallon than a year ago. If you drive, what would you change first: how often you drive, how far, or what else you spend on? Why? Answer in two or three sentences, and give a reason.