'Track every penny:' Inflation prompts some folks to change their money habits

When Cara Berkeley noticed it cost her an additional $20 to fill up her car with gas, she knew she had to take additional measures to counter the effects of rising inflation.

“Everything’s costing more, but $60 for gas was the tipping point," Berkeley said. "I knew I had to think about everything more critically, and track every penny."

She now buys groceries more strategically, makes meals that last for several days, and downloads digital coupons. She's holding off on buying a much-needed replacement for her 2006 Acura, and finding additional income by driving for lift and monetizing her personal finance blog, pennypolly.com to supplement her salary as a full-time marketer.

“I’m making dramatic changes that make me want to cry,” the Nashville, Tennessee, resident said.

With the annual rate of inflation in the United States now at a 31-year record high, Berkeley is hardly alone in her concern.

Numerous polls indicate the vast majority of Americans are worried. Google searches for the word “inflation” are at record highs. More than three quarters of Americans (77%) say inflation is affecting their lives, according to a Yahoo News-YouGov survey.

After all, inflation, which had been lying dormant for years, is no longer confined to a few pandemic-disrupted categories such as lumber, imported electronics and used cars. It has broadened into just about everything that Americans regularly spend money on — from clothing to rent to electricity and food.

Consider this: Energy costs are up 30% year over year, according to the Bureau of Labor Statistics. Gasoline is up nearly 50%. Used car prices are up 26.4%, and new vehicle prices have increased 9.8%. Furniture and bedding is costing 14.6% more. Food prices are up 5.3% year over year, and some categories — including beef, veal, and bacon — have posted gains in excess of 20%.

“Consumers are seeing prices they’ve never seen before, and they’re having to stretch their dollars further and further each month,” said Greg McBride, chief financial analyst at Bankrate, a personal finance website.

Unlike policymaker projections that inflation would moderate by the end of this year, the latest data shows that it’s accelerating.

That’s increasing the risk that price pressures could stick around, said Cristian deRitis, deputy chief economist at Moody’s Analytics. “The expectations that these high prices will persist for some time is feeding into the anxiety,” and adversely affecting consumer sentiment — now at its lowest level in a decade.

“Assuming that the Omicron variant does not take the economic recovery off course, inflation is likely to rise in the immediate term, but things should simmer down over the next few quarters as supply issues are resolved,” he added.

Like many Americans, Berkeley isn’t convinced. In fact, in preparation for what could be the most expensive winter for natural-gas heated homes since 2008-2009, she recently invested in a space heater. She also has a roommate moving in later this month to help offset her housing costs.

“I never thought I’d be in this position at my age,” said the 45-year old. “It doesn’t make me happy, but I guess I’ve just got to bite the bullet right now.”

Personal Finance Journalist Vera Gibbons is a former staff writer for SmartMoney magazine and a former correspondent for Kiplinger's Personal Finance. Vera, who spent over a decade as an on air Financial Analyst for MSNBC, currently serves as co-host of the weekly nonpolitical news podcast she founded, NoPo. She lives in Palm Beach, Florida.