Who Benefits From High Inflation?

Key takeaways

• High inflation isn’t fun for anyone, but there are some silver linings from it
• Those with low fixed-rate mortgages, precious metals stocks and recession-proof stocks can benefit from the situation
• AI investing can help you with your high-inflation portfolio strategy

The latest inflation rates from the consumer price index (CPI) have come in at 4.9%, giving hope that the Fed’s interest rate crusade is slowly working — but not fast enough, as the figure is well above the 2% target.

It begs the question — does anyone ever benefit from high inflation? Believe it or not, there can be some winners depending on the circumstances. Let’s go into them.

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Who benefits from inflation?

High inflation usually means things get more expensive and households cut back on spending. There are ways to be on the winning side so you can ride the inflation waves without too much concern.

Low fixed-rate mortgages

If you were lucky enough to lock onto a low-interest mortgage in the last decade, you’re shielded from the worst of inflation issues. The fixed rate ensures your mortgage repayments stay the same, regardless of what new mortgages are going for.

Not to mention, as your mortgage gets paid down you build equity in the property. Homes typically go up in value, so those with low-interest mortgages are in the best position right now.

Precious metal stocks

Stocks in gold, silver and other precious metals tend to hold their value against high inflation. Their intrinsic value means they’re valued differently to normal currencies, plus central governments tend to increase their gold stores during times of economic uncertainty which pushes up prices.

It’s not a perfect correlation as they’re still liable to volatility and the market conditions, but it can soften the blow of a declining stock market.

The stock market

Wait, doesn’t the stock market usually go down when inflation is high? That can be true, but that doesn’t mean there aren’t some winners, even when inflation is running rampant.

Inflationary pressures can affect businesses just as much as consumers, who then need to pass the cost onto customers to maintain profits. As a result of high prices, the value of some industries can rise in times of high inflation. Typically it’s the consumer goods and utilities companies that do the best.

The bottom line

We can’t pretend high inflation doesn’t paint a grim picture for most situations, but there are some silver linings to be had from the situation. Until inflation falls, the best option is to change tack and deploy a recession-busting investing strategy — or let AI investing do it for you.

The economy isn’t too great right now and recession fears are growing. Q.ai’s Recession Resistance Kit is your bunker against uncertainty. An AI finds the top-performing recession-proof stocks, dynamically updating the Kit’s holdings as needed to help you build wealth in a downturn.

Download Q.ai today for access to AI-powered investment strategies.