Paid more for just about everything this year? Expect to dig even deeper into your pockets in 2022.
Consumer prices increased by 5.7% year-over-year in November, according to the Personal Consumption Expenditures price index, the Federal Reserve's preferred inflation measure. The current reading is far above the Fed's target of 2%.
The Fed says it may raise interest rates in 2022 to reduce inflation before it significantly harms the economy. Inflation has been rising throughout the year, fueled by high consumer demand, labor shortages and widespread supply chain disruptions.
Americans have been worrying about rising prices this holiday season, as the prices of goods like toys, turkeys, wine and Christmas trees all went up. Even discount stores like Dollar Tree have increasing their prices.
The Federal Reserve indicated earlier this month that it may raise interest rates at least three times in 2022 to deal with rising inflation.
Higher interest rates should encourage Americans to save more since returns on savings accounts will be higher. At the same time Americans would be discouraged from borrowing since loans would be more expensive. Ultimately higher borrowing costs and less spending, should help bring price rises under control.