Inflation is Rising – How to Combat It! Monday Market Update 5/9/22

Inflation has surpassed 40-year highs, putting pressure on Americans’ wallets. 

 According to a Moody’s Analytics report, prices are rising across the board, from energy to food to housing, costing the typical American household an extra $327 each month. This is more than the $296 per month projection from last month. 

 The most recent statistic is based on an 8.5 percent year-over-year growth in the Consumer Price Index in March. A basket of products and services is measured by the index. 

 Food prices are up 1% month over month and 8.8% year over year, while fuel prices are up 18.3% year over year and 48 percent since February. 

How do we combat inflation? There are a few things that you can do to prevent and help out your wallet.  

Here are some tips:  

  1. Budget  

Because costs fluctuate so often, it’s a good idea to check and adjust your budget every week. Cutting away stuff you don’t need, such as subscription services, is one approach to saving money. You may also try to bargain for reduced expenses such as cable or vehicle insurance. When not in use, disconnect appliances or utilize power strips with switches that allow you to turn off the goods hooked into them to save energy. According to the Department of Energy, you might save 5% to 10% of your domestic energy consumption by doing so. Lowering the thermostat might also help you save money. 

  1. Shopping responsibly and anticipating weeks to come 

You can save money at a discount food shop if you don’t require a certain brand. Purchasing things in bulk from a warehouse retailer such as Costco or BJ’s may help you prevent price increases in the future. To comparison shop, look at the unit price of a product, which is the cost per unit of that thing. Canned products, for example, may be charged per ounce, whereas paper items may be priced by sheet or foot. So, while a product may appear to be a better value at first glance, it may not be since it contains fewer units than a higher-priced one. Another great way to save money is food prepping, thinking about traveling less when it’s unnecessary to burn less gas, and thinking ahead of the little money-saving occurrences you can do for the weeks to come. 

  1. Investing in Real Estate and General 

As we work through present challenges, we’ll probably enter a deflationary climate for a while. Investing in real estate directly or through publicly listed REITs can both aid your portfolio in the face of rising inflation. Real estate is a common hedge for individuals to employ since it tends to sustain or improve in value over time. This is an area that should not be disregarded because rents and housing prices tend to grow during inflationary periods. Any smart budget will provide you with a savings cushion, allowing you to not only put money aside for investments but also absorb certain price increases without having to adjust your spending patterns. Continue to save and invest, particularly for your retirement. You may not be able to influence economic situations, but you can influence your spending and saving habits. Individuals should think about investing in assets that can normally withstand inflation. 

  1. Paying Down Debt 

When inflation is strong, interest rates are often raised to keep the economy under control.If you have any floating or variable-rate debt, you should be mindful of the possible impact of rising interest rates on your budget and prioritize debt repayment before it becomes a problem. Credit card interest rates are likely to alter now that the UAE Central Bank has raised interest rates, generally within a billing cycle or two. Limit the amount of money you may spend on your credit cards. This prevents you from overspending and encourages you to plan ahead of time for your daily expenses, lowering the amount of interest you pay on your loans.