The inflation wave that crested at a 40-year high last year and remains elevated now has eroded U.S. households' sense of financial security, the Federal Reserve reported Monday, with many saying they had reduced their savings to make ends meet, delayed purchases or swapped into cheaper products as they shopped.

In an annual survey that cast the corrosive effects of inflation on Americans' confidence in their economic security in stark relief, the Fed said the percentage of respondents who said they were doing "at least okay financially" in 2022 tumbled by 5 percentage points - the most since the survey was launched a decade ago - to 73%. It had stood at a record high the year before.

The share of those saying they were worse off shot up 15 points to 35%, the highest level by far since the Fed first started asking that question in 2014. The Fed launched the "Survey of Household Economics and Decisionmaking" in 2013.

Annual inflation as measured by the Consumer Price Index peaked at 9.1% last summer, the highest since the early 1980s, and remains elevated now at 4.9%. Fed officials have raised interest rates aggressively in response and have repeatedly expressed their determination to bring inflation to heel by whatever means necessary.

Fifty-four percent of adults said that their budgets had been affected "a lot" by price increases, with parents of children under 18, Black and Latin American adults and those with disabilities ranking among the most likely to report an impact from inflation.

Indeed, overall one-third of households cited inflation as their main financial challenge, up more than fourfold from 2016.

A question meant to measure households' wherewithal to overcome a modest financial emergency showed fewer thought they had the ability to meet an unexpected $400 expense using cash or the equivalent, such as a credit card expected to be repaid in full at the next statement. Sixty-three percent said they would use cash for such a cost, down from a record high 68% in 2021.

Meanwhile, the survey's measures of household incomes and respondents' sense of the job market showed more adults last year received or asked for a pay increase or promotion.

(Reporting By Dan Burns; Editing by Andrea Ricci)