How to See Through Price Inflation
There are probably certain products or services that you have been buying regularly for years, if not decades. And over time, you’ve probably learned how much these things cost, and in turn, whether something is inexpensive, overpriced, or feels right.
But lately—especially after annual inflation rose to a four-decade high of 8.5% in March —nothing seems to be a good (or even decent) value. As frustrating as that is, it also makes sense in the current circumstances, according to a recent article in the Wall Street Journal . Here are some strategies for coming to terms with our new financial reality.
Understand (and accept) that prices will change
According to Scott Rick, an associate professor of marketing at the University of Michigan who studies financial decision-making, the current rate of inflation is especially annoying for people under 40 , who he says have never experienced such a price spike before.
And, unfortunately, everyone will have to get used to it. “There is no going back to the way things were, ” he told the Wall Street Journal . “You have to upgrade and use it.”
So rather than stubbornly refusing to adjust our idea of what prices should be, Rick says it’s important to understand and accept that rethinking our idea of what constitutes good value is an ongoing process.
Continue your research
But recognizing that costs will continue to rise over time doesn’t mean we should stop doing our homework before we make a big purchase, notes David Wessel, director of the Hutchins Center for Fiscal and Monetary Policy at the Brookings Institution, in the same paper. . Article in the Wall Street Journal .
He explains that during this type of inflation, it’s easy to approach high-value items with the thought that since everything is expensive now, there’s no point in wasting time and effort looking for them at lower prices. But these people are more likely to accept the first price they see, which may not be the best, adds Wessel.
Instead, he recommends comparing prices and doing a lot of research , including asking friends or colleagues how much they paid for similar products.