For example, take a look at your fuel bill: The CPI may indicate that there is a 1% jump in the price of gas, but that doesn’t really mean anything to you until you check your own numbers. If you’re paying 5% more for gas than you were a few months ago, you’re suffering at what is likely the higher end of the gas inflation scale. But gas is just one example. One way to be certain that you’re keeping your expenses in line is to check your totals against the national averages. You won’t be able to stop your costs from rising, but if you can keep your costs from growing faster than the rest of the country’s, you’ll be ahead of the game.
what causes inflation?Virtually every major economist has a theory about what causes inflation, from increasing demand for goods, which pulls prices up, to decreasing supply, which causes scarcity and also drives prices up. The truth is that all the theories are right in some ways and wrong in others. But none of that matters much when you’re the guy caught in the throes of inflation. For the individual, inflationary spikes — no matter what the cause — mean only one thing: trouble.
You’ll see prices jump on everything from food to gas, but don’t expect help from your boss. His costs will go up too, which means your wages will likely stay the same. But there is something you can do: Get a new savings account. Interest rates typically rise with inflation — though not as much. The trouble is that few banks do you the favor of offering you the higher yield. If you open a new savings account, however, you’ll get the most recent rate. Likewise, if you have money to invest, an inflationary period is a good time for bonds.