The consumer price index (CPI), a key inflation barometer, jumped by 7.1% in November from a year earlier, the U.S. Bureau of Labor Statistics (BLS) reported. The CPI measures the year-to-year change in prices paid by consumers for housing, food and fuel. The BLS uses the CPI to track price changes for 80,000 goods and services.
In November, inflation moderated from its recent 9.1% peak in June 2022 but still remain higher than any point since the early 1980s. Consumer prices for goods and services have been rising at their fastest rate in four decades.
Although economists expected in November a 7.3% annual increase in inflation, a decline in the annual inflation rate doesn’t mean prices fell for goods and services; it just means prices aren’t rising as quickly.
Inflation 🧵…
Headline CPI came in at 7.1% y/y & 0.1% m/m, below the est of 7.3% & 0.3%. Services CPI (magenta) still increasing but less quickly. Goods CPI (blue) narrowing materially, ditto for Energy (yellow). pic.twitter.com/VTkBOeXwWF— Liz Young (@LizYoungStrat) December 13, 2022
How to Protect Your Money from Inflation
When inflation is rising at a rate higher than normal, here are steps you can take to protect the purchasing power of your dollars.
- Trim your expenses. To minimize the impact of inflation, review your spending and identify areas to reduce or eliminate completely. It will free up money to invest so you can be better prepared for the future.
- Wait to pay off low-interest debt. Paying off debt is usually good, but you may want to hold off on making extra payments if you have low-interest debt. Your debt becomes less expensive due to inflation. The extra money may be better used for other purposes—like paying off higher-interest loans.
- Invest your money. Inflation causes your savings to be worth less over time. To hedge against inflation, you need to invest your money in the stock market. If the prospect of investing is scary, consider a diversified portfolio of index funds to lower your risk levels.
Inflation has ruined everything from going out to buying holiday presents, but, as recent signs show, it may finally be starting to cool in at least some segments of the economy. For example, gas prices are dropping very quickly.
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