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What Will Cost More — and Less — in 2019

If you’re in the market for a new car, you may want to invest in a set of wheels sooner rather than later. Automobiles are one of a number of products expected to see a price spike as a result of government tariffs. Seafood, furniture and bicycles are other goods that could cost more thanks to the brewing trade war. Outside of tariffs, the price of health care and housing is also anticipated to climb in 2019 thanks to a combination of inflation, rising interest and shifts in the market.

However, it’s not all bad news: Consumers will see prices for certain groceries, tech products and possibly gas remain steady or decline during the next 12 months.

[Read: 7 Ways to Keep Your Health Care Costs in Check.]

Here’s a look at three categories that are expected to cost more in 2019.

Health care. The cost of health care is anticipated to rise next year, but not everyone will be affected in the same way.

The financial firm PwC projects the underlying medical costs for employer-based health insurance will increase by about 6 percent in 2019. Benjamin Isgur, Health Research Institute leader at PwC, says that spike will be driven by costs associated with the development of new treatments, increased drug spending and the consolidation of hospitals and facilities into larger systems.

“This doesn’t mean that the premium will necessarily go up by that much, but the underlying cost of service will increase,” Isgur says. That could translate into higher deductibles, coinsurance or copayments for health services.

As for premium costs, expect a mixed bag in 2019. The nonprofit Kaiser Family Foundation analyzed silver-level benchmark plans on the government’s health insurance exchange and found both double-digit increases and decreases in premium amounts. They ranged from a 27 percent drop in premiums for plans serving Philadelphia to a 30 percent increase in Fargo, North Dakota.

Housing. The housing market might start to slow in 2019, but prices should continue to increase. Lawrence Yun, chief economist for the National Association of Realtors, unveiled his forecast for the coming year at the organization’s annual conference. He predicts a 3.1 percent increase in the price of existing homes from 2018, making the national median price $266,800 in 2019.

“What you’re going to see is millennials finally making their way into the housing market,” says Jeffrey Taylor, co-founder and managing director for Digital Risk, a company that serves the mortgage industry by providing compliance services and other solutions.

Taylor points to a rollout of UltraFICO scores as helping to propel younger buyers into the market. Currently being piloted, UltraFICO is a new credit scoring model that will allow checking and savings accounts to be included in calculations, something that could boost the scores for those with limited credit histories. Once it is fully rolled out next year, consumers will be able to opt into having an UltraFICO score created. They can also choose which bank accounts to link to their score. “That’s going to open up the box a lot in terms of millennial buyers,” Taylor says.

More buyers in the market could drive up prices, but increasing interest rates will make mortgages more expensive. So while the housing market will continue to be tight, consumers may end up getting less for their money in the coming year.

Cars. Automobile manufacturers rely on parts imported from China, but many of those items were slapped with a 10 percent tariff earlier this fall. The tariff, which is a tax on designated imported goods, will increase to 25 percent after the new year. As a result, car prices are expected to rise in 2019.

Johan Gott, principal with consulting firm A.T. Kearney, says the strong U.S. dollar will help blunt the effect of the taxes, but there will still be a trickle-down cost to consumers. Chinese manufacturers will charge more for their products to cover the tariff, and businesses will pass along that cost to consumers in the form of higher prices.

It’s something Gott says is already happening in some sectors. He points to an announcement from Coca-Cola earlier this year that the company would be increasing beverage prices as a result of a new aluminum tariff. “The cans they use are more expensive,” Gott says.

Once the 25 percent tariff is in place, the cost of a new car could increase as much as $6,875, according to the Center for Automotive Research. Prices for used vehicles could also go up if more consumers decide to buy pre-owned rather than new cars and trucks.

[See: 20 Tips for Saving Money at the Grocery Store.]

While health care, housing and car prices are expected to increase, the following three categories should bring flat or reduced costs for consumers.

Groceries. The price of food eaten at home is expected to remain stable. Overall, the price of groceries could rise 1 to 2 percent in 2019, according to the U.S. Department of Agriculture. However, certain food categories, such as fats and oils, pork and eggs, could decline.

What’s more, some industry watchers say there are factors that could help further push down costs for consumers. “Competition in the grocery industry has intensified with planned growth of Amazon and expansion by international chains such as Aldi and Lidl,” says Haresh Gurnani, Benson-Pruitt professor of business and executive director of the Center for Retail Innovation at Wake Forest University. “This should put further pressure on prices in the grocery retail industry.”

Tech gadgets. Alex Shvarts, chief technology officer for small business lender FundKite, sees 2019 as the year in which technology prices for many, but not all, brands continue to fall. “Forget Apple-related products,” he says. “They are in a world of their own.”

While the cost of Apple gadgets isn’t likely to go down, other brands are dropping prices to gain a larger share of the market. This is particularly true for voice-controlled technology like Amazon Echo and Google Home. Shvarts say it’s in a company’s best interest to get a device into a home even if they don’t make much profit off the initial sale. “Why do these things listen to us?” he says. “They are designed to create more advertising opportunities.”

Gas. Predicting energy prices can be difficult, but the U.S. Energy Information Administration estimates the price of crude oil will drop by $2 a barrel in 2019. It also anticipates the national average price of a gallon of gasoline will be $2.75, the same as 2018.

[See: 15 Things That Impact Your Finances.]

There’s plenty of potential for those prices to change though. “Uncertainty in international geopolitics generally means higher energy prices,” says Willard Delavan, associate professor of economics at Lebanon Valley College in Annville, Pennsylvania. Unrest in the Middle East, along with rising tensions between Russia and Ukraine, could affect how much people pay at the pump in 2019.

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What Will Cost More — and Less — in 2019 originally appeared on usnews.com



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