For months, Americans have been grappling with runaway inflation, and it’s hurting their finances in many ways. For some people, inflation has meant having to dip into their savings accounts to cover their essential bills. For others, it means building up large balances on credit card failing to earn enough to make ends meet – and racking up costly interest in the process.
In January, the consumer price index, which measures changes in the cost of consumer goods, registered a 7.5% rise 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 — you may be struggling to pay 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 getting a extra work to increase your income. Even if your schedule is quite busy, you can choose different gigs that allow you to work at your leisure, such as driving for a ride-sharing service.
It also pays to see if there is better credit card there than the ones you use. If you are able to double or triple the amount of cash back you get at the supermarket and at the pump, that boost 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.
Alert: The highest cash back card we’ve seen now has 0% introductory APR through 2023
If you use the wrong credit or debit card, it could cost you dearly. Our expert likes this first choicewhich includes a 0% introductory APR until 2023, an insane reimbursement rate of up to 5%, and all without annual fees.
In fact, this map is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.
We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts.Maurie Backmann has no position in the stocks mentioned. The Motley Fool owns and recommends Goldman Sachs. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.