How to protect your finances against inflation

The economist Friedrich von Hayek once likened the control of inflation to the act of trying to catch a tiger by its tail: an impossible task with savage consequences for our macro and personal finances. Judging by the most recent inflation statistics, the big cat is already out of the bag. So how can we stop rapidly rising prices mauling our hard-earned wealth?

Consumer price inflation in the UK was 2.1 per cent in May, trebling since March and surpassing the Bank of England’s predictions. The U.S. equivalent, meanwhile, rose to a whopping 5 per cent last month reaching its highest level since August 2008.

Some experts agree with the central banks’ view that this all temporary. Ron Temple at Lazard Asset Management points out much of the US inflation surge is down to used cars and airfares, ‘easily explained’ by a shortage in semiconductors and an inevitable bounce back from depressed prices last year.