With reports of inflation now commonplace in the media, it’s time to face the music: our travel plans may be impacted. From a financial standpoint, inflation essentially means more demand for the same amount of goods–in other words an inflation of the money supply relative to goods. Whatever the cause, we now have rising costs in nearly all categories of the consumer price index. The inflation rate has really taken off, and you need to know if inflation will dash your travel plans. Take a look at the cart below from the US Bureau of Labor Statistics, and the trend line would be obvious to a Kindergartener.
What goods or services might be affected?
Airline Costs
The obvious big ticket item is airline ticket costs. My internet search for articles on this topic came up really sparse. I can only attribute that in part to the delayed effect of inflationary pressures. In other words, perhaps we haven’t seen the true brunt of this force. The airline industry relies heavily on the price of jet fuel, and has its own idiosyncratic market conditions. Plus, with Covid-19 travel restrictions waning in certain parts of the world, the airline industry will likely experience a “boom” period of sorts where an uptick in demand might level out the preceding lean 24 months, thereby putting “lipstick on a pig” so to speak. The real squeeze in airline ticket costs may come later. However, keep an eye on ticket costs and ensure you build in flexibility to your itinerary. The ability to be flexible with dates, times, and even destinations may be a way to hedge any costs rises. If you are too rigid you could get hammered by future costs rises. If you HAVE to take that flight from Europe to Southeast Asia, for instance, at an exact time, it would really sink your budget if that route spiked in price, so stay nimble.
Lodging Costs
When you plan for an extended road trip, there are certain things that must be purchased, like hotels, hostels, and Airbnb listings. The cost of many of these things will rise during an inflationary cycle. It might make sense to investigate more non-traditional lodging options in the face of rising costs. Things like campsites and hostels might become more popular for travelers. We talk about some of these methods in our traveling with children post. Choosing an Airbnb listing with a slightly smaller sleeping space is something to consider. I’m not saying cram everyone into a single room, but if you had to do that for a few nights you could. Or find locations where you can stay outside of a larger town and have train or metro access to the town center for sightseeing. I know that when I’m in Prague, staying in a surrounding area is dirt cheap at times. I know how to use the trams and subway there so perhaps we’ll be able to get a reasonably-priced suburban flat for a month.
Gasoline Prices
Another transportation-related cost is gasoline. If you plan to take any road trips in the near future–I know we plan on doing this for winter skiing–the cost of gasoline has a real effect on transportation costs. Gasoline currently costs $3.60 at the pump in Colorado. Both of our vehicles are fairly fuel efficient. It’s axiomatic that these costs tend to rise in summer driving months, so we may dodge that bullet for our ski trips. Again, the oil industry is idiosyncratic, so far be it for me to opine on the insider variables. But I think there will be some supply issues as well as an increased demand in that area. If gasoline prices double, for instance, your road trip next summer could get cut short. And the government may do something policy-wise that spikes prices.
The last time the US saw price controls was the late 70s. I wasn’t even born yet but we’ve all seen the imagery. I think these are likely in the area of gasoline prices. I cannot believe that this would be attempted after what occurred back in the 70s, but I think we’re headed there again. For our trip to Europe, perhaps we can avoid this shock because presumably we’ll have our outbound flight to Iceland already purchased, and won’t need much on-the-ground fuel/petrol. In Europe, we can use better public transportation, whereas travel in the US requires a lot of automobile use.
What if other countries attempt price controls? That could mean waiting in longer lines than usual for trains, food and other goods. Again, it’s best to build tons of flexibility into your itinerary. Plan to get stuck in the cheaper places, rather than the big cities. In other words your trips to large expensive European cities should be shorter and have definitive exit strategies if possible.
Food, Drink, and Restaurants
We’ve already seen food prices go up a ton in the US. I personally have had to hold off on some of the luxury purchases I used to make regularly. Likewise, while traveling you should keep an eye on your meal purchasing more closely than ever. Is there a cheap way to eat a fun meal? Start investigating this now, not when you show up in a town or city. For instance, in many European cities, there is ample outdoor space for picnics when the weather is nice. I plan to take my picnic game to the next level. European outdoor markets and street vendors are second to none, and we plan to make the most of it.
Beer and wine costs will go up, though in many countries beer tends to be cheap such as the aforementioned Czech Republic. I’ve always recommended eating and drinking with an eye toward local customs. If you drink and eat what the locals do, you will inevitably buy the cheapest goods. But if you MUST have Jack Daniels while in Turkey, be prepared to be gouged. This luxury gouging effect will be especially acute in a global inflationary cycle.
Other Goods and Services
Things like insurance, paper goods, clothes, bags, and other travel-related items will surely go up to some extent. Many of these things aren’t huge line items on a travel budget. But it’s good to think about these ancillary items now. Is there something you can cut out that is likely to be costly overseas? Your favorite soap or shampoo is tough to find overseas in the best of times, so imagine finding it if there are further global supply chain disruptions. The same goes for any over-the-counter medicine.
Final Takeaways
The issue of travel costs are always relative. Is inflation likely to destroy your trip? Probably not. But it will certainly impact the trip in subtle ways. While it’s always good habit to be frugal while traveling wherever possible, it’s especially important in these times. I hope this article will inspire you to think about the finer points of trip planning and budgeting. Though it’s not fun to think about, the global financial market will likely change quite a bit and this can and will impact your travel. Stay nimble, flexible, and smart, and you should weather the storm. You may also have some off-the-beaten-trail experiences you’ve missed in the past.