5 ways to fight the impact of inflation

Inflation is an unavoidable part of the economy, and one of the biggest threats to your personal finances. As prices of essentials like food, fuel, rent, and services rise, the value of your money steadily erodes, reducing how much you can buy and save. While you can’t control inflation itself, you can control how prepared you are for it.

By building a focused budget, clearing high-interest debt, automating your savings, and choosing inflation-resistant financial tools like a high-interest savings account, you can protect your purchasing power, grow your wealth, and stay on track with your long-term goals.

What is inflation?
 

Inflation is an increase in the prices of products and services over time that affects people's purchasing power.

For example, in a month, you purchase essential grocery items by spending ₹2,000. Next year, the price of certain food items goes up due to the impact of inflation, and your cost increases to ₹2,200. It means you are spending ₹200 extra for the same items due to a higher inflation rate. Paying this inflated price may affect your monthly budget.

What is inflation rate?
 

It is the rate at which the product and service prices increase. Due to an increasing inflation rate, your purchasing power or the value of money reduces over time.

We can calculate the annual inflation rate using the formula below:

Inflation Rate = [(B – A) ÷ A] x 100

B = Current CPI

A = Past CPI

How does inflation affect you?
 

As prices rise, the purchasing power of your income falls, meaning the same amount of money buys fewer goods and services than before. This affects almost every aspect of daily living, such as:

· Essential expenses: Everyday items such as groceries, cooking gas, electricity, and healthcare costs steadily climb, forcing households to either spend more or cut back elsewhere.

· Fuel and transport: Petrol, diesel, and public transport fares often rise faster than income growth, increasing monthly commuting costs.

· Housing and rent: Inflation can push up property prices and rental rates, taking up a bigger share of your monthly budget.

· Lifestyle and services: School fees, insurance premiums, and even leisure activities become costlier, leaving less room for discretionary spending.

This impact is especially noticeable in rural areas, where essentials like food account for a larger portion of household spending. According to recent CPI data, price spikes in key food categories have disproportionately affected rural consumers, straining already tight budgets.

Over time, unchecked inflation doesn’t just reduce spending power—it can also slow down your savings growth, delay financial goals, and make future planning harder.

5 practical ways to fight the impact of inflation
 

By adopting a few practical money habits and making smarter financial choices, you can minimise its impact and keep your savings working harder for you.

1. Create a focused budget to protect your savings from inflation
 

Build a budget that separates essentials from discretionary spends. Use categories and limits (weekly or monthly) and review them regularly. When prices rise, adjust non-essential categories first—cut subscriptions, reduce dining out, and look for lower-cost alternatives for routine purchases.

2. Cut down high-interest debt to free up cash during inflation
 

High-interest debt is especially harmful during inflation because interest costs compound the squeeze on your cash flow. Prioritise paying off high-interest loans and credit card balances. If you have multiple loans, consider consolidation or refinancing to a lower rate so you free up cash for savings.

3. Build a liquid emergency fund to stay financially secure amid inflation
 

Aim for three to six months’ living expenses in a liquid form (savings account or short-term fixed deposit). This protects you from having to sell investments or take high-cost loans during price shocks or income disruptions.

4. Automate your savings to stay ahead of rising inflation
 

Automation forces discipline: set up automatic transfers from your salary account into a savings account or short-term investment every payday. Increase the transfer amount when you get a raise so saving grows without active effort. Even modest, regular savings help your buffer keep pace with rising costs.

5. Choose high-interest savings accounts and short-term tools to beat inflation
 

Not all savings accounts are equal. An IDFC FIRST Bank savings account offers competitive interest rates up to 7.00% p.a., monthly interest credits (for faster compounding), and no charges so your real returns stay intact. For longer horizons, complement your cash buffer with inflation-resistant instruments, e.g., certain debt funds, inflation-indexed products, or a ladder of fixed deposits, depending on your risk profile.

How IDFC FIRST Bank can help grow your wealth
 

IDFC FIRST Bank’s savings products can support your anti-inflation strategy: competitive interest rates up to 7.00% p.a. with monthly credits mean your cash grows steadily, while zero-fee features and digital tools reduce costs and improve cash management. Combine a high-yield savings account for liquidity with planned investments for longer-term inflation protection to build a resilient financial plan.

Conclusion
 

Inflation is an economic reality, but its impact on your life is manageable. By budgeting carefully, cutting high-cost obligations, automating savings, and placing your cash in the right accounts, you can protect purchasing power and stay on course toward your goals. Start with small, consistent steps today and use banking tools that maximise return while keeping your money accessible. With the right mix of discipline and products, you can make inflation an obstacle you plan around, not one that derails your future.

Opening an IDFC FIRST Bank savings account can help protect your savings and meet your long-term financial goals. With a high interest rate and monthly interest credits, you can make the most out of your money, thus increasing your monthly savings.