Investment Banking Giant Sounds a Warning: Inflation May Not Cool Off in 2022

Talk about bad news.

For months, Americans have been grappling with rampant 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's meant racking up hefty balances on credit cards in the absence of earning enough to make ends meet -- and accruing costly interest in the process.

In January, the Consumer Price Index, which measures changes in the cost of consumer goods, noted a 7.5% rise in inflation compared to the previous year. At this point, the hope is that those levels will start to trickle back downward over the course of 2022.

But a new report from Goldman Sachs tells a different story. While it's not easy news to hear, it's important for consumers to know about.

The inflation picture has worsened

In a recent report, Goldman Sachs economists warned that inflation levels have been worse than anticipated in recent months, and things may not improve so much in the course of the year.

There are different factors contributing to high levels of inflation. These include supply chain disruptions, conflict overseas, and a general mismatch between available jobs and the workers who want to perform them.

Now to be clear, Goldman Sachs does expect consumer prices to cool this year. But that may not happen at the rate or pace consumers -- or economists -- were initially hoping for.

How to cope with ongoing inflation

If you're tired of seeing your living costs keep going up, you're in good company. But if your wages haven't risen -- or if they haven't risen proportionately -- then you may be struggling to keep up with your bills.

If that's the case, it may be time to revisit your budget and see if there are ongoing expenses you can slash temporarily. There's nothing wrong with paying for cable TV when money isn't tight. But if you've been struggling lately, that's the sort of discretionary expense you may want to shed for a few months -- or replace with a lower-cost alternative, like a streaming service or two.

You might also consider getting a side job to boost your income. Even if your schedule is pretty jam-packed, there are different gigs you can pick up that let you work on your own terms, like driving for a ride-hailing service.

It also pays to see if there are better credit cards out there than the ones you're using. If you're able to double or triple the amount of cash back you get at the supermarket and pump, that boost alone could help offset the higher prices you keep facing.

Unfortunately, rampant inflation may be with us for much of 2022, and consumer price levels could rise before dropping down. If you're having a hard time keeping up with your costs, it pays to rethink your spending, give your income a boost, and maximize your credit card usage. These moves won't necessarily solve all of your problems magically -- but they could make the ongoing situation less difficult to manage.