Inflation helps to determine various things in your life. It tells you the status of the economy of your country and how the price of commodities is changing. Inflation affects people in different ways, for instance, it affects your savings, the exchange rate of a country’s currency among other things. The current inflation rate of the United States is 2.1% which is causing jitters amongst various investors and economic analysts.

 

What is Inflation?

 

Inflation is the rate at which the prices of goods and services increase over a particular period of time. There are various ways through which inflation can be measured. However, the most commonly used method is through Consumer Price Index (CPI). CPI records thousands of items people usually purchase in stores and supermarkets such as loaves of bread, milk, movie tickets among others and generates a report over a certain period of time. For example, if the CPI is found to be 3%, it means that the price of commodities has increased three-fold than the previous year. It, therefore, means that consumers have to pay three percent more for products than the previous year.

 

How Increase in Inflation Hurts Consumers

 

Inflation is not a good thing to average income earners. In other words, an increase in inflation decreases purchasing power as well as devalues a currency. On the other hand, low inflation indicates a drastic reduction in the prices of commodities in the market which in turn restricts expenditure and could result in a recession in the long run.

 

Inflation implies you have less money

 

When the rate of inflation is high, it means that the prices of most commodities such as gasoline, groceries and other utilities are also high and thereby leaving you with less money after all expenditures. To counter high inflation, most people resort to buying fewer products than they used to or switch to cheaper commodities.

 

How to protect yourself from High inflation rates

 

One of the best ways of evading high inflation rates is to diversify away from the dollar. The other option is to purchase physical gold. As the president of U.S Money Reserve Philip N. Diehl puts it, gold is wealth insurance.

 

U.S Money Reserve was founded in 2001. It is one of the largest and the only accredited distributor of government-issued precious metals. The company has its headquarters in Austin, Texas and several other offices across the country. The company has over 400,000 customers.

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