Inflation. It’s that buzz word that has been flying around all over the news and media. Even if you might not know the exact definition of inflation I’m sure you’ve felt it during recent trips to the food store, gas pump, or seen subscription services raising their prices.
So let’s start with the definition. The International Monetary Fund defines inflation as, “Inflation measures how much more expensive a set of goods and services has become over a certain period, usually a year”*. In everyday terms it means that the cost of goods and services is rising. And you most likely have the same amount of money in your bank account that you did last week. Now, this same amount of money is “stretching” to buy what you need.
This will be a common theme for the next future months as the Federal Reserve works to raise interest rates and get inflation under control. That means summer activities this year will cost more than they did last year. So what can we do?
Gas prices as we painfully see every time we go to fill up are also being affected by the fighting between Russia and Ukraine. Unfortunately gasoline is what makes our society function. It fuels our delivery trucks/ planes, transports our food, heck it even transports us in cars or planes. If possible, carpool or even work a few days a week from home to cut down on gas costs.
Until inflation is under control we will also see rising prices being passed onto the consumer (aka us). Businesses regardless of size need to make sure they are turning profits and to do that they will cover rising costs by raising the costs of their goods and services. Once again that same amount of money in your bank account will now buy you less. I’m a big advocate for doing an audit and cutting unnecessary expenses- do you really need a subscription to Home Chef, Blue Apron, AND Daily Harvest? This will get more money back into your pocket to spend on the things you really need or REALLY want to do.
Before you panic and think the world is coming to an end don’t worry. This is part of the business cycle and won’t last forever. The FED is working to get things under control and when it does we will all breathe a sigh of relief (and maybe resubscribe to all 15 food delivery services).
*https://www.imf.org/external/pubs/ft/fandd/basics/30-inflation.htm