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With prices of food, gas, and other commodities continuing to increase over the last few months, many Americans have begun to be concerned about growing inflation. Data from the month of March is in, which gives some insight into the future of the U.S. dollar. Has inflation begun to stabilize or is it continuing to rise? Read on below for this and more.
According to the U.S. Department of Labor, annual inflation on the U.S. dollar increased eight and a half percent during the month of March. This figure ranged from a two percent increase in the cost of medical services all the way up to a seventy percent annual increase in the price of fuel. This rate is the highest that’s been seen in the U.S. since the 1980s.
What items are being hit the hardest?
Inflation is making things more expensive across the board, but where it hurts everyday Americans the most is in high-cost necessities like housing and transportation. Average prices of used cars are over 35 percent higher than they were a year ago, and everyone knows the price of gas has been high all year so far.
Additionally, average food prices are nearly 10 percent higher than they were a year ago, and housing costs are up five percent from a year ago. Housing costs tend to be slower to adjust to inflation since many renters are in a one-year contract, but costs are expected to continue rising this year if the inflation rate doesn’t start to fall.
Why could inflation be rising?
There are many theories about the cause of inflation, and in reality, it’s probably a combination of things. The recent U.S. sanctions against Russia have certainly contributed, as everything American companies typically purchase from Russia is now unavailable. Inflation may also be a byproduct of the unprecedented impact of the COVID-19 pandemic, and it isn’t yet certain when the nation and the economy will completely recover.
Ways to protect yourself from inflation
Although inflation is hitting pretty hard this year, there are multiple things you can do to protect your money. Any money you keep in the bank during periods of high inflation decreases in value far quicker than it grows through interest, but investing your money in something with a higher interest rate can keep it safe from inflation. Doing that can also help you break even or continue to compound your money.
This year is a great time to consider putting money in a retirement account or another long-term investment. Meeting with a financial advisor can help you know what your options are and pick a strategy that fits you. Additionally, home interest rates are beginning to rise rapidly, so if you’ve been considering purchasing a home in the near future, it may be a good idea to start making plans before prices rise too much.