Three ways to neutralize the impacts of inflation

The latest data from stats sa indicates that South Africa has a year-on-year inflation rate of 5.5 %, the highest since March 2017. Inflation is the general increase in the price of goods and services in the economy, this essentially means that the same money can buy much less goods and services. By doing nothing with your money, in real terms you are actually getting poorer even if you maintain the same amount of money. Certain sectors have inflation well above 5.5%. Transport has an inflation rate of 15%, oils and fat 21% and fuel at 34.5%. This means that if those sectors form a disproportionate share of your monthly expenses, you are getting poorer much faster than 5.5% per year. How then, as Muslims, do we neutralize the negative impacts of inflation?

1.      Reconfigure your buying patterns. One way to mitigate the negative effects of inflation would be to substitute items with high levels of inflation for those with low levels of inflation. Substituting meat which has an inflation of 8.5 % with fish, fruit and vegetables which has an inflation of 4.7 %, -3.8 % and 2.8 % respectively would be a good example of this.

2.      Increase income. If you have your own business this means an increase in prices if possible. If you are employed you may negotiate with your employer and request a raise.

3.      Invest in assets. Given that many businesses and consumers are feeling the impacts of inflation the first two options may not be viable. This is where investing in assets can save you. Solid shari’ah compliant shares, gold, real estate and established shari’ah compliant cryptocurrencies are some assets which have been shown to neutralize the negative impacts of inflation. However, while investing in assets is an amazing methodology of neutralizing the negative impacts of inflation it requires foresight and some patience.

Allah knows best