In 2022, the cost of everything has become increasingly—almost astronomically—high. Food rose over 10% in the past year (the most significant increase since 1981), and gas prices have become ridiculous. To top it off, the average rent in the U.S. is over $2000 now.
With all these soaring prices, it’s getting harder than ever to make ends meet. Of course, much of this is caused by inflation. But, what causes inflation? When will it end, and how can we combat it? To learn more about inflation in 2022, keep reading!
What Is Inflation?
Inflation is the gradual increase of goods and services throughout all sectors of the economy. You’ve probably recently heard the term “Consumer Price Index ” a few times. The Consumer Price Index (CPI) measures changes in how much individuals pay for everyday goods and services. For the last 12 months ending in June 2022, the Consumer Price Index (CPI) rose 9.1-percent. While that might not seem like much, this increase is across the board for just about everything. So it’s a massive jump from only one year ago.
Many factors come together to increase prices and cause inflation. A few of these include:
- Increased money supply
- Increased public spending
- Rising wages
- Policy changes
- Tax reductions
- International market price increases
A few of these factors don’t seem like such a bad thing, do they? But when they are combined, it creates the perfect storm for a tough economy.
What Impact Did COVID-19 Have on the Economy?
The COVID-19 pandemic undoubtedly had a major impact on what’s happening today. The economy was paralyzed entirely by COVID-19 in the spring of 2020. Companies closed and many people (22 million, to be exact) lost their jobs.
A recession followed. But it did not result in an extended economic downturn. Instead, businesses began to speed things back up after people got vaccinated. As a result, demand for goods and services shot up, and at the same time, supply chains seized. With demand so high, and supply so low, the cost of goods skyrocketed.
Will This Inflation Spark a Recession?
For now, it is tough to say. While many financial experts predict that a recession will follow, others say they do not anticipate it this year. So things are really up in the air. Because of this uncertainty, staying on the defense and playing it safe with your finances is a wise idea. For example, stick to a budget, hold off on big-ticket purchases and save as much as possible.
Why is Inflation So High Right Now?
We’ve discussed some of the causes of inflation and how the pandemic affected our economy. But why, in 2022 specifically, is inflation so high? Many reasons have contributed to high inflation in 2022, but perhaps some of the most important are upset between supply and demand, government spending, and slow Federal response.
Upset Between Supply and Demand
As we mentioned earlier, supply chains began to seize after the economy started to boom again. This was due to an increase in vaccinations and people returning to their normal activities. In 2022, the economy is still recovering and suffering from this phenomenon, but the demand is still much too high for the supply to adequately cover. Therefore, with supply chains still interrupted and more heightened demand than ever, we can conclude that the considerable difference between supply and demand has a lot to do with the current inflation rates.
During times of inflation, people tend to point the blame on American leaders, the current administration, and world events. For example, some analysts believe the $1.9-trillion coronavirus relief package—which delivered $1400 checks to most American households—is the problem. Others point the finger at the war in Ukraine. These factors have most certainly contributed to government spending. And in a tumultuous economic situation, many believe the government has simply spent too much.
Slow Fed Response
The Federal Reserve, America’s central bank, is responsible for determining and tracking inflation rates. The bank administered its own stimulus policies toward the beginning of the pandemic. However, they were slow to respond to price increases across the nation when the expectations of inflation rates began to change. A result of this slow response was sweeping economic uncertainty in a post-pandemic America.
How Can I Beat Inflation?
So we’ve discussed some factors contributing to inflation and why everything is so expensive. But now it’s time to talk about ways to beat inflation.
Beating inflation is a term that is thrown about quite often. But the truth is, no one person can actually beat the economic standing of the entire country. However, you can find various ways to reduce your overall costs, stretch your money further, or earn additional income to keep up with increased prices.
Find New Ways to Save
Finding new ways to save money can help stretch your paycheck and get more for your money in the wake of inflated food, gas, and housing costs. There are many ways to save money when purchasing everyday goods and services. These can include couponing, joining rewards programs, or even staying loyal to certain stores.
Couponing has been around forever, but if you’ve ever been a coupon clipper, you probably know there has never been a better time to pick this hobby up again.
Check out your local weekly ad for savings, research savings on sites like Instacart, or enroll in your grocery store’s loyalty program to earn even more coupons or cash back on your purchases. These small things might not seem significant, but they can add up quickly.
Staying loyal to one store will also help you save. Many supermarkets have loyalty programs. As you spend money, you earn points redeemable for cash back. Of course, some people like to shop at multiple stores to save money. But if you do the math, you just might be able to save more by sticking with one grocery store.
Reduce Your Expenses
Reducing your expenses can also help you beat inflation and make your paycheck go further each month. One way to reduce your costs is to be mindful of your utilities. For example, shut off lights when you aren’t using them. Turn down the heat and put on a sweater. Or use fans instead of air conditioners. Take your bike to work to save on gas. There are tons of ways to save money on the things you do every day. You just need to get creative.
Additionally, reducing the amount of money you spend on food can make a huge difference. So start cooking at home from scratch. Take leftovers to work for your lunch. And make your own coffee at home. These little things will add up to big savings.
Earn More Income With A Side Hustle
A “side hustle” is an additional job or income stream to supplement your paycheck and bring in more money each month. There are many profitable side hustles that have become increasingly popular over the last few years, especially in the wake of the COVID-19 pandemic.
Many people have opted for jobs like grocery and food delivery, selling digital products, or audio transcription. But there are dozens of side gigs you can try out.
Another way to earn more cash weekly or monthly is with paid online surveys. Of course, you won’t replace a full-time job with surveys, but this side hustle is simple, and you can do it anywhere whenever you have a few extra minutes of free time.
Branded Surveys is one of the most popular sites to start a side hustle doing paid online surveys. Branded encrypts and protects your data as a user, connecting you with researchers, companies, and institutions who want to give you money for your opinions.
Costs have risen in the past year, and everyone is feeling the pinch. We’ve had times of inflation in the past, and we will likely have them again in the future. But if you are diligent, you can find many ways to beat inflation so it has less of an impact on your life.