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Consumer Snapshot: Life in the Time of Inflation

An inflation arrow destoying some groceries

In mid-June the Fed raised the benchmark interest rate by three-quarters of a point. That followed the same amount that it had cumulatively raised the rate in the prior three months. In an effort to slow down inflation, their goal is to do so without triggering a recession. That’s a difficult task to achieve without a doubt, and one that many worry may be unattainable. But even if the Fed is successful in walking this tightrope, that does little to help consumers today. The impact of inflation on consumers currently is significant, and many are turning to unique inflation strategies to survive. Hopefully, these will be enough for them to weather the storm.

The current inflation rate has exceeded eight percent in the last several weeks, rising quickly over the last several months. In fact, historically, its rise has been the fastest on record in the last 4 decades. As a result, many individuals and families have had to react quickly to these changes. Some have resorted to some tried and true inflation strategies well known to most. Others are approaching things in more interesting and innovative ways. In any case, the impact of inflation on consumers is causing a notable shift in lifestyle behaviors. From meals, to transportation, to vacations, inflation is making its presence known.

“You can’t turn the news off about money because you have to pay for food or pay for gas.”- Vaile Wright, Psychologist and Senior Director, American Psychological Association

Conservative Inflation Strategies

When it comes to many individuals and families, there is a sense they have little control over prices increases. Because inflation has hit groceries, gas and housing prices significantly, the impact of inflation on consumers has been substantial. Consumers see little choice but to cut back and be more conservative. After all, food, transportation, and shelter are non-negotiable items for the vast majority of Americans. Sure, there might be some savings in canceling a music streaming subscription or skipping the dry cleaner. But current price increases in the essentials demand additional inflation strategies.

Someone reading a horror story
What’s the impact of inflation on consumers? Go to the grocery store and see for yourself!

For many, a positive impact of inflation on consumers has driven them to look at their spending and create a budget. This might be finances 101, but for some, it’s something in which they’ve invested little energy. Knowing where your money’s going is essential in dealing with inflation. once this is known, there are several inflation strategies to consider. Many consumers today are canceling unnecessary services and subscriptions, dining out less, and shopping at discount stores. They’re also getting essential items through used marketplaces like Facebook and eBay. And others are opting for staycations despite having the itch to travel in a post-COVID era.

“You may be able to offset some of the increase in your expenses by taking a closer look at your bills, cutting what you don’t need, and trying to reduce or negotiate the rest. Looking at all your bills is an easy place to start.” – Andrea Woroch, Consumer Finance Expert

Assertive Inflation Strategies

For some people, cutting back on expenses and choosing less pricey options isn’t enough. For them, they resort to more assertive strategies in addition to the conservative ones. Specifically, they look for ways to increase their income as a means to survive. That means exploring new jobs that pay a higher wage or salary as well as considering some side gigs and hustles. Notably, workforce supply and demand favor employees in several industries currently. Therefore, looking for a better-paying job is one way to appease the impact of inflation on consumers. Likewise, opportunities for freelance work on the side has also increased in recent years. For many, these are attractive options to combat the rise in prices.

(You know what’s risen in demand? Remote workers. Read more in this Bold story.)

Of course, not everyone has the option to embrace freelance work or leave their current position. Time constraints, other responsibilities, and existing employment benefits may be major deterrents. But there are other inflation strategies that some are taking advantage of to generate more income. Specifically, many individuals are turning to the sharing economy for answers. Platforms for sharing a variety of items with others now exist, and they involve much more that Uber and Airbnb. Swimply lets people share their pool while Outdoorsy markets RVs that people can share. There’s even a site, Spothero, that lets consumers advertise their parking spot for rent. The impact of inflation on consumers has clearly encouraged use of some of these more modern opportunities.

“Personal finance is different for everyone, and inflation rates are just as different depending on if you bought a used car, how much you drive, and if you have a family or are single.” – Ryan Frailich, CFP and Founder of Deliberate Finances

Personalizing an Approach

It should be recognized that the inflation strategies a person chooses clearly reflects their situation. Not every option to cut costs or to add income will be feasible. In fact, many living on a tight budget already may struggle in finding effective solutions. The impact of inflation on consumers in these instances may drive them to find novel pursuits. For example, some consumers have turned to home gardening to offset food costs. Others are participating in coops where resource sharing and community support are available. And some are even exploring new living scenarios such as tiny homes or foreign residencies.

It’s not surprising that the impact of inflation on consumers varies significantly from one person to the next. For some, the effects will not be as significant, and their focus may be on shifting investment strategies. In this regard, opportunities for long-term investments and bonds deserve some attention. But for others, inflation strategies are more targeted toward day-to-day living needs. Some will be able to survive by being more conservative while others must consider more creative options. In either case, inflationary pressures are forcing many to consider new behaviors and make some tough decisions. And through innovative thinking and resilience, they’ll undoubtedly survive.


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