How to Handle Inflation-Tips and Strategies

By in Bond, Economics, Inflation, Investing, Stocks | 17 comments

“The Feds Big Worry is Inflation, Not Markets” writes Justin Lahart in a recent article. 

After writing about inflation for 8 years, my predictions of rising inflation are coming true. Now is the time to learn how to handle inflation.

Prices are inching up from recent years, although, nothing like the double digit inflation rates of the 1980’s. In 1980-1982 inflation rates were 13.5, 10.3 and 6.20% respectively. In contrast, the CPI rose 0.5% in January, 2018 and 2.1% over the last 12 months states the

Now 2.1% inflation is still quite low, but fears abound that low unemployment rates will drive up wages and along with it, with inflation. And then the Fed will be forced to raise interest rates even faster.How to Handle Inflation

The Fed is on tap to raise interest rates several times this year. And this matters because when the economy  heats up, with lower unemployment rates and more money in your pocket from the recent tax cuts, there will be more money chasing a stable amount of goods.

This puts upward pressure on prices and feeds inflation. 

The Fed raises interest rates in an attempt to temper inflation. 

Now inflation isn’t all bad. Higher interest rates lead to higher CD and bond rates – great for savers. 

But inflation can shrink your recent pay raise. 

Although the inflation figures remain modest now, at about 2.0%, greater inflation will impact your spending.

Now, you each have your own personal inflation rate, depending upon your purchases. If car prices advance, and you don’t buy a car, it doesn’t matter. But when food prices advance, everyone feels the pinch. As fruit prices inch up, that inflation hurts, if you are a big fruit consumer. 

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If you’re not feeling inflation now, you will be soon. So, here’s my personal inflation confession with tips about how to handle inflation and save money.

Tips & Strategies to Handle Inflation

Fortunately, since inflation is a common occurrence, there are reliable coping strategies. Following are some of my inflation busting strategies, for consumers and investors, as well as tips from across the web.

Inflation Shopping Tips

  • The main premise of shopping in an inflationary environment is to buy in bulk when costs are reasonable. 
  • Stock up on sale commodity items. With cotton prices sure to rise, clean out the Hanes aisle during their underwear sales.
  • Paper towels, napkins, toilet products and other non-perishables are other products to stock up on when on sale.
  • Don’t forget the towels and sheets during the annual January white sale.
  • End of season shopping is a mecca of bargains.
  • In the grocery, check out the tables of “sale and near expiration date” items.
  • Plan your meals and make a list. No impulse shopping.
  • Consider joining a shopping club to save on those items you use most frequently. Make sure not to get distracted by impulse purchases of a 64 pack of skittles candy or other non essentials.
  • Even if you are not a couponer, an app that make couponing easy. 
  • Barter for goods and services to combat rising prices. 
  • Collaborative consumption is another take on the bartering concept. Great way to get what you need and share what you have.
  • Substitute low cost foods for higher priced ones and use the internet to come up with recipes to fit the ingredients you have on hand. Plug a list of ingredients into the search, and see what comes up.
  • Consignment, second hand shops, and garage sales, especially in fancy neighborhoods, are great for bargains.

Inflation Investing Tips

  • Buy short or intermediate term bond funds, in lieu of long term funds. With rising interest rates, the principal value of the fund will decline as interest rates rise. On the positive side, expiring bonds are replaced with higher yielding ones. 

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  • Maintain a diversified portfolio, as the future is uncertain. It won’t protect you from market declines, but with diversification, when one investment class falls, another may increase.
  • When inflation increases, stock prices usually follow suit. Don’t be afraid to increase those contributions to your stock index mutual funds when you believe inflation is in the wind.
  • Consider these investments backed by the US Government. These two investment vehicles are specifically designed to protect your capital when from the ravages of inflation; Treasury Inflation Protected Securities (TIPS) and Series I Government Bonds.
  • Consider step up notes. These bonds increase their dividend payments at pre-determined intervals.  
  • During periods of rising interest rates ladder your CDs. Buy CDs, with varying maturities. When one CD comes due, invest the proceeds in a higher yielding CD. 

Now you’re armed with actionable strategies about how to handle inflation. Don’t panic, take charge, and start implementing your inflation-beating strategy. You’ll be ahead of the financial curve.

What are your strategies for coping with inflation?


Updated February 17, 2018.



  1. I went (last year) for the 5% rebate Target credit card too. I also like their store brands. Their prices compete with Costco and there is no membership fee.


    March 13, 2012

  2. Also have the Target (or is it Tarzhay?). While we visit there from time to time, we’ve found it’s not so cheap compared to some local supermarkets.

    Also no mention of buying a separate freezer? Picked one up from Home Depot on sale for $200 and used $100 of gift card points from my AMEX to pay for it.

    Also set aside an area for some baker racks to store your dry goods.

    Investor Junkie

    March 13, 2012

  3. Good advice, Barb. I’ve always heard that you should never go long in treasuries, because you want to be flexible to catch an increase in rates. That might not happen real soon, but it’s good to remember.

    Another way to fight inflation in food is to have a garden. Now is a great time to start planning one and even starting some seeds indoors.


    March 14, 2012

  4. this is nice article’s gave me a lots of an idea and gives me things that i need to know.
    thanks for shearing this…
    good job…. 🙂


    March 14, 2012

  5. Interesting. I was just complaining to a friend about how I can’t find antiperspirant that’s less than $4. I bought a bunch of it over a year ago when I was going through a couponing phase. I didn’t realize how much the price of the stuff has gone up.

    Not long ago, I stumbled across a rather obscure blog that talked about the cost savings that come along with buying nonperishable goods in an inflationary environment. It made me think, “Hmm. You can actually invest in toilet paper and canned goods.”

  6. This can be a big help to most people especially to me…Thanks a lot for the shared thoughts here…


    March 14, 2012

  7. Don’t get me started on Target. I hate that place. Can’t ever find anything I need there. Plus their groceries are laughably overpriced. Sorry for the rant 🙂

  8. @Krantc-I end up spending way too much at the mega membership stores.
    @Maggie-Well, if interest rates were high, it’s good to go long in treasuries, but certainly not now!
    I am committed to planting a garden this year. Plans; tomatoes, grapes to start..
    @Shawanda, That is probably the #1 inflation strategy-stock up on non perishables when they’re on sale.
    @John, I’m afraid to say that their grocery pricing was not the best this week!! Although, I love their decor items on the cheap.

    Barbara Friedberg

    March 14, 2012

  9. Great investing tips! I’m worried about bond funds right now as well. I’m due to rebalance soon and will be taking a look at my target asset allocation. Got to be smart, but also not get caught in short term cycles.


    March 14, 2012

  10. I like the buying in bulk strategy. Buying non-perishables like toiletries that will be used in the next 12 months is practical, even if a bit in the “Doomsday Preppers” mold.

    101 Centavos

    March 15, 2012

  11. My plans to cope with inflation? Well, I am a truck driver who works for one of those trucking companies that delivers goods and passes costs to consumers. My hope is that my company will gouge the consumers (in the name of fuel prices) and give all of us drivers a hefty raise!

    Not really. Actually, I don’t waste a lot of time thinking about things I can’t control. Prices go higher, I pay them. No big deal.

  12. @Busy, I recently bought several low investment grade bonds with 3 years to maturity and paying about 3-4%. I’m staying away from bond funds now!
    @101-I am really committed to “stocking up” when the price is right.
    @Matt-I like your attitude!! Very smart to forget about what you can’t control!!! Good luck with that raise:)

    Barb Friedberg

    March 15, 2012

  13. I hate the real inflation gripping the stores, but yet the Fed says there is no inflation. I’m coping by investing in companies taking advantage of rising costs, so at least I can profit on one end.

    • Hi Robert, Smart move. Companies with some price elasticity and can raise prices as their costs go up are certainly worth a look.


      March 16, 2012

  14. Something I want to write an article about soon (but have not tried yet) is shopping for meats at ethnic grocery stores. I have heard that the prices cannot be beat.

    Amanda L Grossman

    March 16, 2012

    • Amanda, I just thought about this same topic this morning. We have some amazing Hispanic and Asian grocery stores around here.


      March 16, 2012

  15. Great post! I am a constant visitor to your website and reading blogs is my hobby. But today I felt inspired as the blog has pointed out some amazingly valid points. This information will surely help me in my work. Thank you guys, also I am looking forward to reading more stuff like this.

    Quicken Assist 2019

    February 12, 2019


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