Inflation in America has reached a five-year high. January 2017, saw monthly inflation of 0.6% according to the the U.S. Consumer Price Index. That may not sound like much, but if we had 11 more months like it we would have 7.2% annual inflation. While that is not likely, January’s increase has made the annual inflation rate jump to 2.5 percent, the highest since the FED’s massive money flood called QE2 (Quantitative Easing) in 2011.
Price inflation, in economic terms, means that prices of goods and services are rising. For example, suppose a bottle of shampoo costs you a dollar today and $1.25 a year from now, that would mean that inflation has risen by 25%.
For most households inflation means higher expenses. If the family’s income remains the same while other prices go up, the rising inflation will put a strain on your family’s budget. You will be able to buy less for the same amount of money you make. Unfortunately, long-term inflation also takes a toll on the value of your nest egg (i.e. any savings and retirement funds you have). Therefore, it’s important to anticipate inflationary periods and take the necessary steps to protect both your long-term and short-term family finances. Here is a list of some of the steps you can take: [Continue reading]