5 Groups That Actually Benefit From Inflation – Forbes Advisor


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If you’re constantly feeling like you’re losing out during these inflationary times, you may wonder—does anyone actually benefit from inflation?

On July 13, the Bureau of Labor Statistics released its Consumer Price Index and reported that from June 2021 to June 2022, prices on everything from food to fuel, and from dry cleaning to daycare, increased 9.1% on average. The CPI had had notable increases for some time now, but it was yet another jump, and a larger one than economists were expecting (the Dow Jones estimate for 12-month inflation had been 8.8%).

“When prices go up, that’s bad news for buyers—but good news for sellers,” says Wayne B. Gray, a professor of economics at Clark University in Worcester, Massachusetts. Gray points out that the published inflation rate from the Consumer Price Index is an average.

“Every month some prices go up and some go down. How much you are affected depends on what you are buying —and what you are selling,” Gray says.

Here are inflation’s biggest winners and losers.

Inflation Winners

1. Borrowers With Existing Fixed-Interest Loans

Plenty of current and future borrowers won’t benefit from inflation—but people who have already borrowed money and are paying back low-interest loans with fixed rates have something to be pleased about, observes Ahmed Rahman, associate professor of economics at Lehigh University.

“Those with fixed-rate mortgages or student loans may not exactly be celebrating inflation, but they are somewhat shielded from its more deleterious impacts,” Rahman says.

For instance, if you bought a $500,000 home in June 2021 with a 10% down payment, and you pay an interest rate of 2.75% (a rate that was common a year ago) on a 30-year fixed-rate mortgage, you’d pay $2,232 a month. That same mortgage at a 5.30% interest rate would mean a $2,893 monthly payment—over $650 more.

2. The Energy Industry

This won’t surprise you if you own a car and fill up your tank on a regular basis.

“Due to a perfect storm of factors, energy prices have soared over the past year,” says Eric Diton, president and managing director of The Wealth Alliance, a registered investment advisory firm in Melville, New York.

Diton says a major factor in that perfect storm is climate change and the global response to it, but supply chain issues, labor shortages, the war in Ukraine, and Covid are all fueling higher energy prices.

“The result is that oil and gas producers are making record profits, and their stocks have been market leaders,” Diton says.

3. Electric Vehicle Manufacturers

After years of ho-hum sales, companies that make electric vehicles, or EVs, have a lot to celebrate. New car sales of electric vehicles in the second quarter of 2022, climbed 13% over the first quarter. EV sales hit a new record, one potentially driven by motorists weary of high gas prices.

More cars would have probably been sold, however, if electric vehicle manufacturers weren’t struggling with shortages of semiconductors, which are vital components of an EV.

But if inflation continues to push gas prices up, expect demand for EVs to continue.

4. The Food Industry

Generally speaking, inflation has been kind to the food industry. Not everyone, of course. Talk to any restaurant owner, and they’ll tell you how they’ve been crushed by the pandemic and now inflation, given that customers were first afraid for their health if they dined out and now afraid for their pocketbooks. But food manufacturers, like a poultry processor? They’re doing nicely.

“Food prices have risen over 10% over the past year due to a variety of factors, many of the same ones that have affected energy prices,” Diton says. “Russia and Ukraine account for about 30% of global wheat production, and the war has led to a large reduction in output and corresponding leap in prices. As a result, many food producers have benefited from rising prices.”

5. Collectors

We’ll end the inflation winners list on a fun note, especially if you’ve been thinking of selling the baseball cards you collected as a kid, or your coin collection.

“Historically, collectibles such as fine art, wine and vintage automobiles have benefitted from inflationary periods of time as the dollar loses purchasing power,” Diton says.

If you’re a fine art investor, you could be sitting pretty soon. The trading platform Masterworks crunched the numbers from the last major inflationary period, 1973 to 1981, and concluded that during this time, the value of an investment in art went up more than the value of gold.

Inflation Losers

 1. Anybody on a Fixed Salary or Fixed Income

If your salary or retirement income doesn’t budge when inflation causes prices to go up, you may find your budget strained.

“Inflation is bad because it erodes the purchasing power of our income,” says Anne York, professor of economics at Meredith College in Raleigh, North Carolina. “Prices tend to rise faster than wages.”

York explains that if inflation has caused prices to climb by 5%, but your wages have only gone up 3%, you’re not going to be able to buy as much as you used to.

Making matters worse, the federal minimum wage is at its lowest value in nearly 70 years. Wages for the lowest earners weren’t keeping up with inflation for decades before this bout of inflation developed.

Rahman says that you can also be walloped if you’re on Social Security.

“The elderly often lose out more than others because they tend to rely on fixed incomes, and because they often have high medical expenses which tend to rise rapidly during inflationary times,” he says.

If you’re on Social Security, you typically get a cost-of-living increase every January, which prevents seniors from falling too far behind rising prices. But it isn’t much help if prices continue to rise after that adjustment is made.

The Senior Citizens League projects that in 2023, there could be a staggering 10.5% increase in Social Security payments. But that increase can come with complications, including the potential for higher Medicare premiums.

2. Poor and Low-income Americans

If you were living paycheck to paycheck before inflation went up, it has likely become even worse, since your paychecks probably buy less than they used to.

It’s true that during the pandemic and ever since, many people have seen wages go up. But average wages for employees in low-income jobs, particularly in the accommodation and food services sector, are still lagging, per a report from the Pew Research Center.

“Lower-income workers can lose out more than others because most of their money must be spent on food and rent, spending that typically cannot be delayed,” Rahman says.

3. Renters

Generally, your monthly mortgage payment will remain the same, unless your property taxes go up, or you have an adjustable rate-mortgage (ARM).

But renters aren’t so fortunate. As soon as that rental lease is up, landlords can typically raise your rent.

And rents are climbing. According to the CPI report, the rent index rose 0.8% in June—which may not sound like much, but it’s the largest monthly increase since April 1986.

From June 2021 to June 2022, across the country, rents climbed 5.8%. In Manhattan, rent hit a record high in June: New leases had a median monthly price tag of $4,050.

The bottom line on inflation and rent, however, is that when your monthly payment goes up, and especially if you have a set monthly income, the extra revenue you pay to the landlord is going to come out of something else in your budget. And when everything else in your budget is also getting more expensive, that’s when people start considering moving in with their parents or getting a roommate.

A recent Pew Research Center report found that multigenerational living—living in a household with two or more adult generations—has been on the rise for a while, but the increase is fastest among adults ages 25 to 34. In 1971, 9% of these adults were living in multigenerational households; now that rate is up to 25%.



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