Latest / Inflation and Your Money with Fexingo: Protecting Purchasing Power and Beating Inflation / How Inflation Is Sneakily Raising Your Streaming Subscriptions
Transcript
- Lucas: Luna, I want to talk about something that's quietly eating our budgets without most people noticing: streaming subscriptions. Netflix just raised its standard plan again, to $17.99 a month. Disney+ is at $15.99. Spotify Premium inched up to $11.99. Luna: I definitely felt that. I looked at my credit card statement last month and realized I'm paying for four different services I barely use. Lucas: Right. And the thing is, this isn't just anecdotal. Since the start of 2022, the average streaming subscription has gone up about 25 percent. Meanwhile, the Bureau of Labor Statistics' CPI category for 'recreation services'—which includes streaming—has only risen about 8 percent in that same period. Luna: So the official inflation number is undercounting what we're actually paying? That's frustrating. Lucas: Exactly. The CPI is a weighted average of many things, and streaming is a small slice. But for households that subscribe to three or four services, the real hit is much bigger. The latest CPI print from May showed core inflation at 336.1—still elevated. And the 10-year breakeven rate, a market measure of expected inflation, just dipped to 2.21 percent. So markets think inflation is cooling, but your Netflix bill didn't get the memo. Luna: Why are they raising prices so aggressively? Is it just greed, or are their costs actually going up? Lucas: Both, honestly. Content production costs have soared—think writers' strikes, higher talent fees, and the sheer volume of originals. Plus, subscriber growth has slowed in mature markets. So they're squeezing more revenue from existing users. Netflix's operating margin last year was over 20 percent, which is healthy, but they see room to push pricing further. Luna: And they're also pushing ad-supported tiers. I think Disney+ just raised the price of its ad-free tier to force people into the cheaper with ads version. Lucas: That's exactly the strategy. Disney+ now charges $13.99 for ad-free, but only $7.99 with ads. They want to grow their advertising revenue stream. Amazon Prime Video recently introduced ads by default unless you pay an extra $2.99 a month. It's a classic 'price anchoring' move—make the ad-free option feel expensive so you settle for ads. Luna: So what's the smart move for someone trying to protect their purchasing power? Cut the cord entirely? Lucas: Not necessarily. But I'd recommend doing a subscription audit. Look at your last three months of bank statements. Add up every streaming charge. Then ask: am I actually watching this? If you haven't opened an app in 30 days, cancel it. You can always resubscribe later. Luna: I did that last month. I dropped Apple TV+ and Paramount+. Saved about $20 a month. That's $240 a year—not nothing. Lucas: And that $240 a year, if you invested it in an S&P 500 index fund earning, say, 8 percent, it could grow to over $1,000 in 10 years. Small leaks matter. Luna: That's a good perspective. Also, consider sharing accounts. Netflix now charges extra for sharing outside your household, but Disney+ and Hulu still allow multi-profile setups under one account. Lucas: Yeah, the 'sharing crackdown' is another way they're raising effective prices. Netflix added nearly 10 million subscribers after its password-sharing rules kicked in. So they're basically monetizing freeloaders. Luna: Okay, so shifting gears a bit: how do we think about streaming inflation in the broader context of the Fed's battle? If services inflation stays sticky, does that complicate rate cuts? Lucas: It does. The Fed watches services inflation closely because it tends to be more persistent. The core PCE price index, which is the Fed's preferred gauge, came in at 129.6 in April, up from 129.32. That's still creeping higher. Streaming price hikes are a small part of that, but they reflect broader pricing power in the services sector. Luna: And the Fed Funds rate is at 3.63 percent, down slightly from 3.64. So they've paused, but if inflation doesn't cool more, they might not cut again soon. Lucas: Exactly. The market is pricing in maybe one or two cuts by year-end, but it's not guaranteed. So for us, it's about being proactive. Don't wait for the Fed to fix your budget. Luna: I want to go back to the price anchoring strategy for a moment. Are there any services that are actually good value right now? Lucas: I think YouTube Premium is interesting. $13.99 a month gets you ad-free YouTube and YouTube Music. Considering how many hours people spend on YouTube, that can be great value. Also, some niche services like Curiosity Stream or Nebula offer high-quality content for under $5 a month. Luna: And don't forget your local library. Many libraries now offer free streaming through Kanopy or Hoopla. That's zero dollars. Lucas: Great point. So there are options. The key is to be intentional. Otherwise, inflation just steals your money silently. Luna: Speaking of intentionality—if our conversation today helped you think about your subscriptions differently, we always appreciate it when listeners support the show. It keeps us independent and ad-free. If it was worth a coffee to you, that's buy me a coffee dot com slash fexingo. Lucas: Exactly. No pressure, but it helps us keep doing episodes like this. So back to the numbers—one thing I want to highlight is the gold price. It's at $4,080 an ounce, down 3.4 percent in five days. That's interesting because gold is usually an inflation hedge, but it's selling off even as core inflation stays sticky. Luna: What's driving that? Higher real yields? Lucas: Partly. The 10-year breakeven falling suggests inflation expectations are easing, which reduces the urgency to hold gold. Also, the dollar has been stronger. But for the average person, the lesson is: don't chase inflation hedges without understanding the timing. Sometimes the best hedge is just cutting costs. Luna: Like canceling that one streaming service you forgot about. Lucas: Exactly. Every dollar you don't spend is a dollar that keeps its purchasing power. And in this environment, that's a win.