Prices will rise in 2014. They always do.
But prices shouldn't climb too much overall, barring any surprising developments that put the U.S. economy into shock. Inflation is low, at 1.2 percent, according to the most recent calculations from the Bureau of Labor Statistics. Still, if all goes as expected, some things will cost more than others in 2014.
So which items might give you sticker shock? To prepare your budget, here's a rundown of things that will likely be more costly in 2014 than they were in 2013.
Food. The U.S. Department of Agriculture predicts that food prices overall will rise about 3 percent in 2014. But some items on the menu – chocolate, beef, bread and cereal – will climb considerably higher.
Why the rise in prices? "Demand is skyrocketing to the point that it outstrips supply," says Michael Levin, assistant professor of marketing at Otterbein University in Westerville, Ohio. He is referring to a cocoa shortage, which caused chocolate prices to creep higher in 2013 over 2012. Some experts are suggesting prices could climb as high as 26 percent in 2014.
[See: 10 Ways to Save on Food Costs.]
"Consumers can expect to pay higher prices for middle and higher premium labels. It will be interesting if mass brands such as M&M's, Hershey's and Snickers pass along those costs," Levin says.
Beef prices for consumers have also been predicted to climb 3 to 6 percent because there is currently more demand than supply. The USDA has suggested that an increase in the cost of wheat and wheat flour may cause bread and cereal prices to rise in the supermarket in 2014, possibly 4 to 5 percent higher than in 2013.
Clothing. Here's your excuse to shop. According to Kristina Michniak, a global apparel manager at Spreadshirt, an e-commerce platform for individuals and companies to sell and buy T-shirts, cotton-based products will likely increase by 5 to 8 percent in 2014.
Why the rise in prices? Blame it on expected unfavorable crop conditions and the need to use the fields for other crops, according to Michniak. She also thinks that simply anticipating the increase of prices will have a psychological effect on manufacturers, many of whom will raise their clothing prices in 2014 regardless.
Houses. This is good or bad news, depending whether you're a seller or a buyer. "Home prices are on the rise and should continue the upward trend due to the previous downturn over the past several years," says George Cook, executive professor at the Simon Graduate School of Business at the University of Rochester in Rochester, N.Y.
Why the rise in prices? "Interest rates still remain very favorable and new builds are picking up steam," Cook says. "The demand for both new and previously owned homes should accelerate rather quickly and increase prices along with it. There is some consumer optimism about the current economy, which will also encourage new buyers into the housing market. No doubt consumers have been holding off on home purchases until they see more positive signs in the economy. This looks like it could be the beginning of the uptick in home purchases, and prices will undoubtedly reach higher levels."
How much higher is hard to say since housing markets differ vastly from state to state, but in the past year, home prices nationwide increased 10.9 percent, according to Clear Capital, which provides real estate data and analysis.
Automobiles. From 2012 to 2013, new-car prices, on average, climbed 1.1 percent, according to the auto industry research company Kelley Blue Book. Prices should rise at least that much in 2014 and possibly more.
Why the rise in prices? "It is estimated that there are 57 new looks that the auto industry will be unveiling. Those new looks drive up prices," Cook says. "And with the demand now catching up with the supply, you'll see fewer consumer incentives, which will result in bottom-line higher prices for most new vehicle purchases."