You can’t read about investing for very long without hearing about inflation. The concept may be a little difficult to understand, but at its most basic, it comes down to the following: prices rise over time, causing your money to lose some purchasing power. If you could buy a movie ticket in1980 for around $2.89, compared with $16.08 for a movie ticket in 2025, that speaks to the change in purchasing power. Sure, your 2025 movie ticket probably has a larger screen, better sound, and several other value-added amenities, but for the most part, your $16.08 doesn’t have the same purchasing power in 2025 that it had in 1980.1
As of August 2026, we’re seeing inflation up 3.4% year-over-year.2 Inflation is charted in part by measuring the changes in what consumers pay through the Consumer Price Index against the Producer Price Index, which measures the prices that producers receive for their products. Through this, the Federal Reserve finds that the rate that indicates ideal employment and prices is 2%. What moves the needle? There are a number of factors, including demand-pull inflation, where demand for a good or service increases, but the supply filling that demand stays the same, causing prices to increase. The opposite can also be a factor with cost-push inflation, where the supply of a good or service is low, causing the prices to go up.3
What can you, as an investor, do to help manage the effects of inflation? There is no single strategy that works for everyone, but maintaining a diversified portfolio and keeping a long-term perspective can help investors navigate periods of rising prices. Different types of investments may respond differently to inflation and changing economic conditions, which is why diversification can be an important part of an overall investment strategy. Ultimately, how an investor prepares for inflation will depend on factors such as their financial goals, time horizon, risk tolerance, and individual circumstances.1,3
Weathering high inflation periods can be difficult for investors, but sensible strategies and careful management may help you navigate through the challenges. If you have questions about how inflation may affect your financial plan, contact your Patriot advisor to discuss your individual circumstances and goals.
- https://www.forbes.com/advisor/investing/what-is-inflation/
- https://www.bls.gov/news.release/archives/cpi_09112026.htm
- https://www.nerdwallet.com/article/insurance/do-you-need-renters-insurance
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