According to the Washington Post, consumer prices have risen faster in September than they have in the last 25 years (1.2% in one month). Obviously if you've been around in the United States, you can guess that Hurricane Katrina cuased most of this increase becuase of the effects from rising fuel costs (12% last month). This in turn has an effect on the price of goods that are transported across the U.S., like food.
Inflation is a reality that most people are aware is inescapable. What I ask myself is, "is there a way to avoid it or protect my money from it?" Inflation destroys cash. Or more accurately, it destroys your purchasing power. The longer you hold money with inflation as a consideration, the less that money can buy.
So how can I protect myself from inflation? Well, first you could look at investing. Normally, when you invest in stocks, bonds, mutal funds, etc. they generally have a higher return than what the inflationary rate is. There are even inflation-linked indexes that gaurantee a higher rate of return than the inflation rate. What these options boil down to is this: if you own something tangible with a commonly perceived value, you can beat inflation.
If you have ideas on how to beat inflation, please post them in the comments section.
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