U.S. consumers apparently aren’t too optimistic about their finances going into the new year.
Indeed, two-thirds of them don’t see their personal finances getting better, according to a Bankrate survey. It found that slightly more than half see inflation as the principal issue.
Consumer prices soared 6.8% in the 12 months through November, the biggest annual inflation in 39 years.
“Inflation worries have dragged consumer confidence to a decade low and are the top reason Americans don’t expect their finances to improve, and particularly to get worse,” says Greg McBride, Bankrate’s chief financial analyst.
Meanwhile, investors are seeking to hedge rising prices by piling into inflation-linked assets like certain government bonds, commodity funds and real estate investment trusts, the Financial Times reports.
Although central banks like the U.S. Federal Reserve are signaling plans to tighten monetary policy more quickly than expected to help curb inflation, many investors believe interest rates hikes are still months away.
“We expect inflation to remain elevated in the next year, well above the Fed target, particularly as the supply-demand imbalance takes time to sort itself out,” Roger Aliaga-Diaz, senior economist at Vanguard, told the FT.
A record $66.8 billion has flowed into funds holding Treasury inflation-protected securities (Tips), which are U.S. government bonds that are indexed to inflation, according to the FT, citing data provider EPFR.