By Gayathri Madhavan, Deepa Venkatraghvan
This summer is going to be a sweaty one. But moneycontrol's quick poll on inflation suggested that this summer many of you will be guzzling less beer (or orange squash) to beat the heat. Here's why:
When readers were asked what they would cut down on, first, in these times of rising prices:
39% said they would stop eating and drinking out.
33% said they would cut down on petrol and fuel.
28% said they would invest less.
While the scales do dip towards cutting down on lifestyle expenses, what is alarming is that a good 28% are willing to give their investments a go by.
We asked Certified Financial Planner Gaurav Mashruwala what he thought of this trend and here's what he had to say, "Investment is not an expense. It is money put away for future use. So, cutting down on investments is not a good idea."
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Here's what a quick tete-a-tete with DK Joshi, senior economisrt of CRISIL revealed about inflation and the near future.
What caused this inflation?
1. Food prices have gone up, globally.
2. Crude oil prices have gone up. Hence, LPG and kerosene is costier.
3. Commodity prices, like that of steel, edible oil, etc have gone up due to the global price rise.
The effect:
Rising food prices are not going to come down any time soon. The global food supply has reached a 30-year low.
DK Joshi predicts, "Global prices are not expected to come down, in case of wheat oredible oil, while the prices of commodities could ease. We can expect prices the continue rising through this year." |
This may just be just the right time to start saving money. We put together some smart tips to tackle the beast called inflation.
Make smart lifestyle changes
1. Start by curbing unnecessary expenses. What you consider unnecessary, of course, depends on your lifestyle. But broadly, you could skip or cut down on eating out, first-day-first-shows, weekend getaways, et al. Also, hold out for that plasma television or car.
You will save money as well as save you from paying too much, because with steel prices spiralling upward and petrol getting costlier, you may be better off not buying that car right now. Who knows, a good bargain may be around the corner.
One reader looks on the bright side: "One never knows about the cleanliness standards maintained in a restaurant. So, I stick to homemade food, which is healthy and good for my wallet too."
2. Look at alternative sources of income. Think about what you are good at and use your skills and talent to make some additional income. If you have a property that you could rent out, go ahead and do it.
3. If you were planning to start your own new venture, experts advice that you wait for prices to cool off. Or you may incur high costs in the first year, itself.
4. Don't opt for a loan. But if you must take a home loan, DK Joshi says, "The interest rate will rise a little more this year but not so sharply. The good news is that they are likely to dip in a year's time. Which means, you can opt for a floating rate of loan and avoid fixed rates."
Of course, buying a property for speculative purposes is a big no. Read on for smart investment mantras.
Continued in page 2
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