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SC economic experts offer tips for dealing with inflation

There are many ways to fight inflation, experts say, but the most effective is to pay off, or at least pay down, your debts.
Nick Youngson
There are many ways to fight inflation, experts say, but the most effective is to pay off, or at least pay down, your debts.

Experts believe inflation may be at its peak, but it will be year's end before relief is in sight.

If there’s one thing most people have in common these days, it’s the effects of inflation on the family budget. Though wages are up, inflation is outpacing these advances, hovering around 8 to 8.5%, say experts.

University of South Carolina finance professor Dr. Robert Hartwig said many factors have produced this inflationary period, some of them beyond America’s control. One such factor is geopolitics.

“A good example of that would of course be Russia’s invasion of Ukraine, the impact that is having on oil and gas exports from that part of the world,” said Hartwig. “And the ripple effects. For instance, in the world of agriculture, with Russia and Ukraine being some of the world’s major exporters of wheat. The reality is, the world is connected through commodities, be that agricultural commodities like wheat or corn, or oil and gas that flows throughout the world. These are connected markets that are largely beyond our control.”

According to Clemson University economist Dr. Scott Baier, part of the blame for inflation must rest with American consumers themselves. Another factor contributing to inflation, “and it can’t be understated, was the amount of stimulus that the government put into the economy. When you have additional money in your bank account, you’re more likely to go out and spend, and that’s what consumers did, and that helped push up prices as well.”

Hartwig agreed. “People are eating out more, driving more, consuming more gasoline. They’re flying more. We are seeing people book hotel rooms and paying astronomic rates for resort destinations. So to some extent, we are driving it. There’s an enormous pent-up demand for flying, for resort destinations, and for driving, and the suppliers of all those products and services know it, and they are going to raise the prices to the maximum point that they possibly can.”

Then there are the supply chain disruptions caused by COVID, said Hartwig. So, what can consumers do to save money? The professor said the biggest bang for your buck is to pay down your debt: “If you have credit card debt - which would typically be at 15 to 20 to 25 percent for many credit cards - if you pay that down and you begin to pay that off, you can save yourself hundreds if not thousands of dollars per year,” he advised. “That money goes right to your bottom line, right into your pocket – so long as you don’t go back and charge up those cards again as soon as you pay them off. So pay off that high cost debt first.”

Paying off debt also will have beneficial side effects, said Hartwig. “To the extent that you lower your debt or eliminate your debt, you’ll actually raise your credit score. If you raise your credit score, any other interest rates that you might have, you may potentially be able to lower those.”  Plus, he said, “automobile insurers will give you a lower rate if you have a better credit score. So this can save you a very substantial amount, $100-plus per vehicle per year.

And, said Hartwig, instead of paying for car insurance on a monthly, quarterly or semiannual basis, “if you actually pay it all up-front, at the beginning of the year, you can actually save as much as about nine percent a year on that premium.”

Baier offered some tips to save on groceries and gas that most folks know but often fail to use. “For example, at the grocery store, I use my grocery reward card…it helps me cash in on those savings. I’m a little bit more conscious about clipping coupons, both digital and physical coupons… buy in bulk, go to your wholesale club, whether that’s a Costco or Sam’s, you can usually save that way…In terms of gas, again, the wholesale clubs are a good way to save on gas.” And many oil company credit cards give reductions on the price of their brands.

Apps such as Gas Buddy and Upside can help consumers find lower gas prices or offer rebates on fuel, Baier said. Ask for senior discounts at stores, and comparison shop online, he added.

So, when should the country get past the worst of inflation’s effects? Here’s Hartwig’s prediction:

“The expectation is that inflation is at its peak right now, and in the second half of the year will begin to gradually ebb. Again, part of that depends on geopolitical events that are far beyond our control,” he observed. “That said, by the time we get into 2023, and presuming that the Federal Reserve is at least somewhat successful at dialing back the economy” – as it is now doing by raising the interest rate .75 percent – “we’ll probably see inflation recede from what right now is about a 7.6% annual pace, to something closer to 3% for 2023.”

Both experts said price rollbacks will be gradual, but by year’s end, prices - at the pump, for example - should be meaningfully lower than they are today.

Tut Underwood is producer of South Carolina Focus, a weekly news feature. A native of Alabama, Tut graduated from Auburn University with a BA in Speech Communication. He worked in radio in his hometown before moving to Columbia where he received a Master of Mass Communications degree from the University of South Carolina, and worked for local radio while pursuing his degree. He also worked in television. He was employed as a public information specialist for USC, and became Director of Public Information and Marketing for the South Carolina State Museum. His hobbies include reading, listening to music in a variety of styles and collecting movies and old time radio programs.