Although inflation over the past several months has forced Americans to pay more for goods and services, money expert Clark Howard says we may soon get some relief.
He predicts inflation will start declining soon because of measures being implemented by the U.S. government, including interest rate hikes, the latest of which is expected to be announced today.
Some Inflationary Pressures Have Eased
Clark notes that inflation is already showing signs of receding in certain sectors of the economy.
“We’re going through a rotation with inflation,” he says. “A lot of the things that really were engines for inflation have settled down. Goods-based inflation overwhelmingly has been squeezed out: things, ‘stuff.’ A place to live — housing prices that went up, up, up and away, whether for purchase or rental — that has now changed.”
Although that’s good news, Clark points out that the one key sector of the U.S. economy that continues to maintain stubbornly high pricing is “anything to do with services.”
One Sector Where Inflation Continues
Service industries have had a tough go of late because higher costs have had to be passed on to the customer, Clark says. Additionally, many people have changed jobs and/or are asking for more money.
“As the cost pressures have hit people, people have needed to make more money in their lives,” Clark says. ‘The job market has been so very strong. People have been out seeking more money … and in the service side of the economy, labor costs are so much of the overall cost of owning a business.”
How the Federal Reserve Plans To Attack Inflation
The Federal Reserve is poised to raise interest rates again to curb inflation. Clark says this is a necessary step.
“The Federal Reserve is going to have to keep trying to put the brakes on the economy … slow down the economy in order to get rid of the services inflation. And so, it’s going to hurt,” he says. “Depending on where you sit in this economic mix, you’re going to feel some of that.”
But Clark sees good news on the way. He predicts that there won’t be a prolonged, brutal economic cycle.
3 Money Moves To Beat Inflation
So with interest rates set to rise, you may be curious to know what you can do to keep more of your money.
Manage Your Spending
One way to manage your spending is to take a good look at how much money is going out versus what you’re bringing in. Create a budget if you don’t have one.
Get Out of Debt
Try to get out of debt, especially credit card debt, as you can expect any variable interest rate you’re paying on credit cards to rise in the wake of the Federal Reserve’s rate hike.
The first step to getting out of credit card debt? Stop buying things with your credit card. It may be difficult, but you can do it!
Save at the Grocery Store
It’s been tough to get a break on grocery prices as food costs continue to rise. Save money by making a conscious effort to look at the weekly sales that your local grocery store has and shop accordingly.
Clark says, as bad as inflation has been for your wallet, things will turn around at some point in the near future.
“You’re going to see the improvement, barring some really unexpected increase in war activity in Europe or elsewhere. We’re going to get the U.S. economy under control,” he says.