What to do about inflation

Things are looking up, but not in a good way.

According to the National Bureau of Statistics (NBS), Nigeria’s inflation rate in the month of July was 19.64%, a 17-year high and a 1.04% increase from the 18.6% recorded in June. The key factors behind the increase were the spike in the food index caused by the supply chain disruption of food products and the rise in the cost of transportation due to higher energy costs. Challenging times  are here and now more than ever, you must be financially prudent.

As a Consumer: Keep a close watch over your finances and closely analyze your monthly inflows and outflows, so you don’t open your wallet up to more inflation. This won’t be easy as a lot of essential items have shot up in price. Food inflation was 22.02%, its highest level in 14 months while the urban inflation rate was 20.09%, two percent higher than the 18.01% recorded in July 2021. However, the good news is each consumer has a different inflation rate based on their expenses and you can minimize yours.

In addition to that, you should also prioritize building an emergency fund worth at least 3 months of your expenses. You don’t want to have too much cash, so you don’t lose purchasing power, but you also don’t want to have too little cash.

As an Investor: Don’t panic but make necessary adjustment to ensure you have a diversified portfolio, geared to outpace inflation. We recommend our Money Market Fund and Dollar Bond Fund. The Money Market Fund currently returns 9.69% per annum as of August 22 and it consists of a select portfolio of quality, short-term government, and money market securities. The Dollar Bond Fund provides USD denominated opportunities for investors who want to hedge against the currency risk associated with the Naira. It consists of a mix of Cash, Sovereign Bonds and Corporate Eurobonds.

There is no perfect inflation hedge but building your savings and a well-rounded investment portfolio is your best bet to withstand its impact.

As always, please speak to an advisor for sound financial advice. You can also email clientservices@axamansard.com to open a Dollar Fund account today.