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Inflation is back! And our Money Coach, Bill Stanley, said it's not a good thing for consumers because wages are not rising at the same rate.

“We've all seen gasoline prices spike in recent months,” he said. “And now it is getting serious.”

Stanley pointed to Hersheys, which is increasing the price of candy bars by 10 percent. Chocolate comes from cocoa, and the world's largest producer is the Ivory Coast -- which is experiencing political problems, he said.

And it moves down the chain: Candy bars are delivered by truck, and delivery costs more because of oil prices. Wal-Mart is already charging more for cotton and dairy products.

“One company that reports such things (Moody's) says many consumer companies are on the brink of raising prices on many products,” Stanley said. “Stand by for more price increases!”

Inflation means prices will be higher in the future. One strategy that Stanley suggested is to anticipate what you will need in the future and buy it now before prices go up.

“Now, that may work with cotton clothing and shoes but it won't work with food and gasoline,” he said. “Here's a good one - buy Forever stamps.”

If you plan to buy a car or a home in the near future, Stanley said you might want to think about moving up the purchase date in order to get a better interest rate. When the Federal Reserve determines that inflation is a threat to the economy, it will raise interest rates. Experts are talking about a rate hike as early as the end of 2011, he said.

Essentially, the higher cost of goods and services means that we need to pay more attention to our family budget.

“Most of us are on a tight budget,” Stanley said. “When one budget item costs more, we need to cut back in another area. When all budget items increase at once, we must make wise choices so we don't get overwhelmed with debt. That could mean tough decisions and changing our lifestyle.”

When it comes to saving and investing, Stanley said we may need to change our strategy. It might mean buying a CD with a shorter maturity date so we don't get locked into a low rate for a long period. It might mean that we have to put a maturing CD in cash for 6-9 months instead of rolling it over now, he said.

“When interest rates go up, the value of bonds goes down. This is not a good time to put additional money into bonds,” he said. “Stocks are a great way to outpace inflation over the long run. But stocks are risky – and they have gone almost straight up over the past two years.”

His advice is to check with a fee-only financial advisor or a money coach.

Bill Stanley and Money Matters airs every Tuesday on FOX21 Morning News.
If you have question for Bill, contact him directly: MoneyCoachBill@aol.com