How do we beat an 8.5 to 9.3% inflation?

Article by Daisy Banaag (03/06/2023)

Inflation has been one of the hottest topics in the news recently. Inflation rate last January was at 8.7%. The Bangko Sentral ng Pilipinas (BSP) projects that inflation in our country may be within the range of 8.5 – 9.3% for February 2023. This is mainly due to the pressures of increase in prices of LPG, pork, fish, egg, and sugar, among other basic commodities.

Let’s go a few steps backwards. In the table below, data shows the Inflation rate for the past 5 years on the months of January and February:

Source: Retail Price survey of commodities for the generation of consumer price index (PSA)

As you can see in the table, inflation rates for the first 2 months of 2023 is way high from previous years’ rates, thus consumers really felt the pain of increase in prices in basic needs.

Inflation has been a silent killer for a lot of us. Little did we know that a bit of increase in inflation rate decreases the value of our hard-earned money.

For most of us, we keep our Cash within reach because of many reasons. Some would like to have enough liquidity in case of emergencies or maybe to keep afloat after paying their family’s monthly bills or embracing the haven of cash that is within reach. These are all valid reasons. But sometimes when we hold on to these reasons too much, we lose value of our hard-earned money in our bank accounts.

So, the question here is “How do we even beat this inflation?” Here are some common answers I usually hear when I ask this question:

1. “Tiis tiis na lang, magbabawas muna ng gastos”

(Let’s make ends meet by lessening our expenses)

For most fixed income earners, you think this might be the only choice for now. If you can make ends meet by adjusting your monthly expenses, then that will be great for you. But if you want to beat inflation in your own ways, you may look for additional income stream. There are a lot of online or part time jobs we can take to help improve your income.

2. “Alis na lang tayo ng Pilipinas”

(Let’s just migrate to other country)

Some may take this as a joke, but I do know a lot of people who migrated to other countries especially during the pandemic to find a greener pasture in other developed countries. As much as they love our country, sometimes people would weigh their options so they can provide better life for their families. But mind you, some countries also have high inflation rate. Let's talk about this in another post.

3. “Pwede iinvest natin somewhere na lalago yung pera natin”

(Invest your money in a fund that may beat inflation)

The smartest way to beat inflation is to invest it to something that yields higher return rate than the average inflation. The average inflation rate for the past 5 years (2018 – 2022) is at 3.94%. This year alone, as mentioned earlier, Inflation rate posted at 8.7% alone in January and 8.5 – 9.3% alone in February (rate to be finalized, still).

As a Financial Consultant, you can invest your hard-earned money in a lot of investment vehicles like real estate, stock market, corporate bonds, Philippines government securities, crypto currency, foreign currency, among others. Investing is on a case-to-case basis. One financial advice for one person is different to the other. You do not compare why your colleague invested in the stock market while the other invested in bonds. The main point here is to find an investment vehicle that would give you a return of around 4% and above which is higher than the average inflation rate for the past 5 years or better yet a return of 9% and above to beat the current inflation we have this February 2023.

Don’t let your extra money / savings sit in the bank. They will, definitely, depreciate over time because of this silent killer, inflation.

So, whatever your option is, you must be willing to sacrifice something that your future self will thank you for. Whether an increase in hustle to create additional sources of income, looking for greener pastures and better opportunities for you, or investing in a fund that would beat inflation in the long run, the choice will always be up to you.

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Never stop learning because life never stops teaching.

Want to know solid solutions on how to beat inflation even further? Enroll in one of my online sessions, “Buzzer Beater,” a course on how to beat inflation. Limited slots only. Book your appointment here.