Talk about bad news.
- Consumers remained hopeful that inflation would slow in 2022.
- An expert thinks consumer prices won’t fall the way many of us hoped.
For months, Americans have been grappling with runaway inflation, and it’s hurting their finances in many ways. For some people, inflation means having to dip into their savings accounts to cover essential bills. For others, it means racking up big credit card balances without earning enough to make ends meet — and racking up costly interest in the process.
In January, the consumer price index, which measures the evolution of the cost of consumer goods, showed a 7.5% increase in inflation compared to the previous year. At this point, the hope is that these levels will begin to decline over the course of 2022.
But a new report from Goldman Sachs tells a different story. Although this is not easy news to hear, it is important that consumers are aware.
The inflation picture has deteriorated
In a recent report, economists at Goldman Sachs warned that inflation levels have been worse than expected in recent months and things may not improve as much over the course of the year.
Various factors contribute to high levels of inflation. These include supply chain disruptions, overseas disputes and a general mismatch between the jobs available and the workers who want to fill them.
Now, to be clear, Goldman Sachs expects consumer prices to fall this year. But that may not happen at the rate or pace that consumers — or economists — originally hoped.
How to deal with continuous inflation
If you’re tired of seeing your cost of living keep rising, you’re in good company. But if your wages haven’t increased — or if they haven’t increased commensurately — then you may be struggling to keep up with your bills.
If so, it might be time to review your budget and see if there are any ongoing expenses that you can temporarily cut back on. There’s nothing wrong with paying for cable TV when money isn’t tight. But if you’ve been struggling lately, this is the kind of discretionary spending you might want to eliminate for a few months — or replace with a cheaper alternative, like a streaming service or two.
You might also consider finding a side job to supplement your income. Even if your schedule is quite busy, you can choose different gigs that allow you to work on your own terms, such as driving for a ride-sharing service.
It also pays to see if there are better credit cards than the ones you use. If you’re able to double or triple the amount of cash back you get at the supermarket and at the pump, that increase alone could help offset the higher prices you continue to face.
Unfortunately, runaway inflation could be with us for much of 2022, and consumer price levels could rise before falling. If you’re struggling to keep up with your expenses, it’s worth rethinking your spending, increasing your income, and maximizing your credit card usage. These moves won’t necessarily magically solve all your problems, but they might make the current situation less difficult to deal with.
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