Summer means travel, and many of us are itching to break out of our home offices and explore further afield than we have in the last two years. There’s even a term for it: “revenge travel“. With restrictions easing globally, we’re starting to see travel ramping up all over the world. But before you #YOLO and fly off, it’s important to know the context and plan ahead. Your budget will thank you.
1. Which countries have experienced the highest inflation in 2022?
1. Israel
2. Greece
3. Italy
4. Spain
5. Portugal
(Source: PEW Research Centre)
Note that these countries don’t have the highest rates, but the highest change in inflation between the first quarters of 2020 and 2022. The pattern we’re seeing all around the globe is that inflation was fairly low in the early part of the pandemic but has since risen significantly. What that means is that you’ll see transportation, accommodation, and food getting even more expensive.
2. Airfare
For a brief moment, airfare hadn’t caught up to pre-pandemic prices. Now, due to the logistics of rebuilding fleets and contending with fuel prices, airplane tickets have jumped in price. Like the business tip I put forward in the first instalment of the Inflation Special: air carriers have chosen to deal with rising fuel prices by passing them along to the customers. In addition, labour shortages have led to serious disruptions (and many cancelled flights) at airports globally.
3. Other Areas Inflation Has Hit Hard
- Rental Cars: Fleets aren’t back to their pre-pandemic sizes. But, there’s also a global semiconductor chip shortage that is slowing the production of new cars. Inflation is also impacting the cost of cars and repairs. Remember that you have to return the car with a full tank of gas, too – and gas price fluctuations can make that a hefty sum.
- Hotels/Accommodation: Hotel giants like Marriott, Hilton, and Hyatt all cite increased demand and inflation for the reasons that hotel prices will continue to go up throughout the summer. Even Airbnb rates are 37% higher than they were in 2019.
- Restaurants: One of the hardest-hit industries of the pandemic, restaurants are also struggling to manage their increased costs. Smaller portion sizes and higher prices are on the menu as they try to manage their finances. When you build your travel budget, this will be a key area to manage.
4. What about the Ontario Staycation Tax Credit?
If the projections of wait times at Pearson through July and August have you looking for other methods of escape, remember that the Government of Ontario’s Ontario Staycation Tax Credit is available in 2022. You can claim up to 20% of your expenditures (to a maximum of $1,000 individually or $2,000 as a family) to receive back $200 or $400 respectively.
With inflation in Canada reaching 7.7% in May (the highest since 1983), prices are high, and so is demand – but you save on the uncertainties and headaches of international travel.
5. Travel Tips for 2022
- Look at pushing your vacation off of peak periods: September and October are still pleasant in the Northern Hemisphere
- Make use of the Ontario Staycation Tax Credit (and keep all of your receipts to making claiming your credit easier!)
- Set up price alerts for travel apps/websites to take advantage of any deals
- Create a plan, and stick to it. Can you shop at markets and prepare your own food rather than eat out every day? Can you use public transport to avoid costly rentals?
The next and final instalment of the EverSavvy Financial Inflation Special looks to the future: Inflation 2022 – What’s Next?
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