Rising inflation, which is when the prices of goods increase, reshapes how families and young adults across the United States spend, save and plan for the future. For California residents, in particular, the high cost of living is forcing many to delay homeownership and other major financial goals. Higher prices for everyday essentials, housing and education are prompting many to prioritize needs over wants and reconsider long-term financial decisions.

According to the article “Inflation and the cost of living: Are consumers spending less?” published by J.P. Morgan Research, a leading research firm in major industry surveys, inflation had prompted consumers to cut back on spending and switch to affordable alternatives. 

Celine Pannuti, head of European Staples & Beverages at J.P. Morgan, noted that rising inflation had driven more cautious, defensive consumer behavior.

The article referenced a survey from Morning Consult, an intelligence company, where the majority, 56%, were prepared to reduce their shopping following higher inflation rates due to the Russia-Ukraine conflict and COVID-19 lockdowns. Respondents prioritized essential goods such as groceries over luxury items like electronics by a margin of 39%. 

“‘Private labels broadly lost market share over 2020 and 2021, as big brands were beneficiaries of stronger supply chains and consumer demand for trusted brands. However, this has, to varying extents, gone into reverse during 2022 as the cost-of-living squeeze on consumers intensifies,’” Pannuti said in the article “Inflation and the cost of living: Are consumers spending less?” published by J.P. Morgan Research.

For example, during this period, Walmart’s private brands were on the rise, with growth in food categories doubling in the second quarter of 2022 compared with the first. Inflationary pressures had spawned greater consideration of affordability on essential purchases for the average customer. 

“When we go grocery shopping, prices are much higher. When we pay our utilities, the price is much higher. And if you borrow money to buy a home and you have a mortgage payment, or you’re in a car loan and you’re making a car payment, inflation also causes the interest rates to go higher,” United States history teacher Charles Evans said.

As a result, younger generations are changing their spending habits to reflect the increase in prices.

“I’m more cautious when it comes to spending money, and I’m trying to be a little more frugal… I’m trying to be careful and think, do I really need to buy this or do I want to buy this?” senior Melinda Lim said.

According to the article “Who is most affected by inflation? Consider the source” by John Grigsby, an empirical macroeconomist, meaning someone who studies the economy using real-world data, the source of inflation affects how different groups experience its impact. 

Oil-driven inflation tends to hurt lower-income households more due to raised gas and utilities prices in conjunction with reduced wages and job opportunities. In contrast, inflation caused by excessive money in the economy often hurts wealthier people more, because the things they own, like stocks and savings, lose value.

Living in California often intensifies the effects of inflation. For example, data from “Gas Price by State 2025” shows that California’s gas prices frequently approach $5 per gallon, while in nearby states like Arizona, gas prices are closer to $3 per gallon. According to the U.S. Energy Information Administration (EIA), California also leads the Pacific region in electricity costs, with the price per kilowatt-hour at 31.58 cents. In comparison, neighboring Oregon and Washington charge nearly half that amount, at 15.74 and 13.66 cents, respectively. Residents face higher prices for everyday goods, making the financial strain feel greater than in other states.

According to last year’s data from the World Population Review, which compiles information from governmental agencies, California ranks third for the highest cost of living, with housing prices twice the national average, correlating to its first rank for homelessness.

“Being a resident of California, the cost of living here is very high. Things cost more in California, so even though the inflation rate might be similar to other states, it feels higher here,” economics teacher Jeffrey Amimoto said.

Amimoto recognized that rising inflation had increased financial risks for younger generations, particularly regarding major financial commitments.

“It’s very difficult for them to purchase a home because housing prices have appreciated much faster than people’s earnings. They won’t be able to buy homes as easily as in the past because prices are much higher than they were in prior years,” Amimoto said.

Inflation has affected more than wallets. It meant people struggling to cover basic expenses and feeling constant stress.

According to the article “Inflation hardship, gender, and mental health,” conducted by researchers affiliated with leading research institutes in the United States and Canada, each “inflation hardship”, such as cutting back on food, delaying medical care, or borrowing money, was linked to significantly higher rates of psychological distress. 

Women reported slightly higher average distress scores than men (7.9 versus 7.4), and were more likely to experience inflation hardships, with 6.9% of women compared with 11.4% of men reporting no hardships. However, the effect of each additional hardship was more pronounced in men once the number of hardships became extreme, at 5 or more.

“They’re having to deal with the stress of managing their money and making sure their family has the essentials. That increases cortisol levels inside your body, and it does damage to your health,” Evans said.

As a result of rising living costs, many households have had to adjust how they earn and manage money.

“A lot of people have to take multiple jobs because one job isn’t enough to sustain your lifestyle right now. I know that yes, the minimum wage has increased, but that doesn’t mean it’s enough for one person or their whole family,” Lim said.

According to J.P. Morgan Asset Management’s 2025 College Planning Essentials guide, the cumulative percentage price change since 1983 to last year in college tuition is 899%, with a 5.6% average annual increase. 

“The younger the child, the more college is likely to cost. Add up four years per child, and it equals one of a family’s largest expenses,” the guide states.

However, financial aid has not kept pace, rising 3% while college costs have increased 31%, according to the guide’s reference to the College Board’s “Trends in College Pricing” and “Trends in Student Aid” reports. Due to these financial pressures, families may feel pressured to take on loans, which poses significant risks in the future. 

According to a survey conducted last year by MarketWatch Guides, a subsidiary of Dow Jones & Company, referenced by the guide, college debt has prevented 97% of the graduates from taking on major life decisions, such as home purchases and becoming parents.

Rising costs have encouraged students to weigh career prospects more heavily in their educational choices, often at the expense of personal interests.

“I want to pursue a career in medicine, and that is extremely costly and expensive, so now that makes me worry, will I have the ability to go to the school that I want to go to?” Lim said.

According to the article “Public Beliefs about Inflation” featured in The Digest by the National Bureau of Economic Research (NBER), most respondents identified government spending, debt, and taxation as one of the top two causes of inflation, with Republicans more likely to hold this view.

“When inflation is rising, I think the public blames the government for that. They feel the government is the reason we have inflation, so they don’t trust them as much,” Amimoto said.

With public concern focused on government policy and the persistent impact of rising prices, many see inflation as a long-term challenge rather than a temporary issue.

“Once inflation becomes a problem, there’s no quick, easy fix. It takes a long time for your economy to cycle through and to be able to eventually get rid of inflation… I think inflation is here to stay,” Evans said.