| Unless you've been living under the world's biggest rock the last few months, you know that the country has been experiencing unprecedented inflation.
Treasury Secretary Janet Yellen warned there could be another year of high inflation amid the uncertainty caused by the invasion of Ukraine. Prices have soared at their fastest pace in 40 years over the last 12 months. "We're likely to see another year in which 12-month inflation numbers remain very uncomfortably high," Yellen said in an interview with CNBC.
The latest data from the Labor Department show consumer prices climbed 7.9% in February from a year ago, the largest annual increase since January 1982. Prices were up 0.8% last month, an acceleration from January as energy prices spiked with the Russia-Ukraine crisis.
So, with the inflation rate at a 40-year high, the key question becomes: What can be done to hedge inflation?
One financial advisor is urging his clients to maintain a cash reserve which he says can be helpful if larger bills or unexpected expenses come in. It makes sense to keep track of your cash flow which is helpful in navigating this financial environment.
Another advisor says to stay invested in equities. Even amid the recent market rout, the primary way to offset inflation is to own equities. The reason for that is that stocks have a strong track record, he said. Over more than 90 years, equities have had returns in excess of inflation.
Another way to combat rising prices is negotiate your debts. For example, try to refinance your mortgage or pay off any existing debts. Also, when buying new items, pay attention to deals that offer 0% interest for extended periods.
For shoppers, the larger price tags require more planning and perhaps even a budget overhaul.
To help keep your food budget under control, take full advantage of any store promotions to stock up your freezer and pantry. Another strategy is to look for food bargains at drugstores and convenience stores. Many of these outlets are expanding their variety of fresh foods, and some may offer lower prices than traditional stores. Also, order online and look for free delivery to cut the cost of getting groceries, take out and other daily essentials.
Meanwhile, to shield yourself from soaring prices at the pump, experts offer some tips.
Track gas prices. Apps like GasBuddy, Gas Guru and AAA TripTik can track down the cheapest price per gallon between gas stations. Pay with cash to get the lower price (the price per gallon can be 10 cents to 15 cents more per gallon for credit card transactions). Or use a gas rewards credit card to earn cash back on those charges. Sign up for loyalty programs, which many major gas station chains have, to help offset the price at the pump.
For more cool stuff like this, be sure to visit CNBC's Financial Advisor Hub and CNBC + Acorns Invest in You: Ready. Set. Grow. |
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