Buying groceries TODAY: inflation hedge?
Have you been to the grocery store lately? Erosion of the value of the dollar is not only present in the increase in the cost of energy, but also in the dramatic increase in the cost of our basic family food needs since late last year, as our economy started to unwind.
Like almost everyone I know, I’m trying to stretch the value of every dollar available. I’m still a net buyer of equities as my investment policy statement dictates- while most are unnerved (panicking?) by the gyrations of the stock market, I believe that our current economic slowdown is *temporary* and not representative of a systemic breakdown. But my family cannot eat future stock market performance today.
So I’ve been considering taking some short-term emergency fund savings (where we’re earning about 2.25% annual yield and losing money after the effects of inflation) and stocking up on non-perishable food and related supplies as a hedge against what is reasonable to expect: higher prices tomorrow.
It’s not a grand plan, but today every little bit counts; and it’s less about “math” and more about logic: The idea is based on the premise that I *expect* food prices to increase at a rate greater than 2.25% over the short-term. There’s limited downside if I’m wrong:
We’ll always use the toilet paper.
P.S.: Remember, there’s more literary goodness to read on the main page here.
June 1st, 2008 at 18:20
Yes, great idea, buy today and save from the increase of tomorrow. Of course that is assuming you have no debt and do not have a mortgage or a car loan (most people do not consider these items as loans but a need) that you are paying interest on. Because assuming you do have any debt you are paying more than the rate of increase in inflation with interest.