The Tell-tale Signs of Rising Inflation and How this Could Affect You

OlufisayoDecember 5, 20160654 views

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Inflation is not unheard of in the financial world, as the markets regularly fluctuate. Sometimes though it can catch us off guard and one moment you’ll find yourself having to pay more for certain things when the rates have increased.

To help you avoid any situations like this – and ultimately to help you keep your finances in order – in this post we’ve detailed some of the tell-tale signs of rising inflation and some examples of how this could affect you and your money.

The Political Situation

An election or political vote of some kind can have a big bearing on inflation. This is often because of the potential of new policies and ideologies surrounding the country’s economics that a new leader or party would bring to the table.

Take for instance the current situation in America; Donald Trump recently won the Presidential Election and intends to reduce the amount of non-American imports. This course of action is leading many to predict that inflation will rise on the dollar after an initial drop caused by a rise in demand from American-made goods.

Global Currency Changes

The overall foreign exchange rates between the nations’ respective currencies can also be an indication of rising inflation. Say for instance the value of the euro was to drop against another currency like the pound, this might lead to a surge in demand for the euro as people again look to buy these cheaply which could then (like the above) again push up inflation.

Costs of Raw Materials Changing

For those working in the import/export industry, one way to identify if inflation could occur is if the price of a key material such as oil suddenly goes up. This would have subsequent knock-on effects on the costs of other goods and could lead to inflation on prices.

Rising Wages

In a similar vein to this, if there is a successful campaign for increased wages on a national scale, the economy will often have to compensate for this with a rise in inflation.

How you Can Be Affected

As inflation rises a typical person in an average household or set of circumstances can be affected in the following ways:

Living costs will increase as overall prices for goods and services go up. This might mean you see your monthly expenditure also increasing
If you have a variable interest rate mortgage on your home this can also fluctuate along with the rise in inflation
For those looking for a new home you might find differences in the prices and offers available from different providers
Taxes and house prices can also rise along with inflation which could affect your savings and potential property investments

These are just a few examples of what can happen, but the truth is that there are also other areas that can be affected in your daily routine. If you’re ever in any doubt the sensible option is to seek professional financial advice to help you manage your money better during periods of inflation.

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