Guide

This Key Inflation Measure Just Hit Another High

sMore help for just about everything this year? Expect to dig deeper into your pockets in 2022.

Consumer prices rose 5.7% year-over-year in November, according to the Personal Consumption Expenditure Price Index, the Federal Reserve’s preferred inflation measure. The current reading is well above the Fed’s 2% target.

The Federal Reserve says it may raise interest rates in 2022 to reduce inflation before it seriously hurts the economy. Inflation has been on the rise throughout the year, driven by rising consumer demand, labor shortages and widespread supply chain disruptions.

Americans have been worried about price hikes this holiday season, as the prices of goods such as toys, turkeys, wine and Christmas trees have soared. Even discount stores like Dollar Tree have increased 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 because savings account returns will be higher. At the same time, Americans will be discouraged from borrowing because the loans will be more expensive. Ultimately, higher borrowing costs and lower spending should help control price hikes.


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