Prices are rising, and that has many Americans concerned about their financial outlook for the year.
Inflation surged 6.8% in November from a year ago, the fastest pace since 1982, according to the U.S. Department of Labor. People are paying more for everything, from the gas for their cars to the food they put on the table.
Energy prices are up 33.3% and housing costs, categorized as shelter in the Consumer Price Index, increased 3.8%, the highest since 2007. Meanwhile, food prices jumped 6.1%.
That can cause a big disruption to your budget, according to Greg McBride, chief financial analyst at Bankrate.
“For those that are trying to pay down debt or catch up on savings, it is very much an obstacle to progress,” he said.
To be sure, 26% of Americans believe their financial situation will be worse in 2022 and, of those, 70% believe inflation is the biggest barrier to their success, a Bankrate survey found.
In addition, 42% believe their finances will stay about the same, with 44% of those respondents citing inflation as the reason for the lack of improvement.
The financial website, through YouGov Plc, polled 2,450 adults Nov. 29-Dec. 1.
The Federal Reserve had long said it expected inflation to be short-lived since it is being driven by Covid-19 supply chain and demand issues.
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However, the central bank announced in December it will take moves to combat inflation. It’s going to accelerate the reduction of its monthly bond purchases and then will start raising interest rates, which is expected to begin in late winter or early spring. The central bank typically raises interest rates to slow the economy and bring inflation down.
In the meantime, McBride suggests tracking your spending and looking for opportunities to take advantage of sales, coupons and various discounts and loyalty programs.
“It can be redeeming your cash-back credit-card rewards as a way to defray out-of-pocket expenses,” he said.
