Investing During High Inflation

July 7th, 2022 | News | By Graham Wingar

Inflation is at the forefront of concern for governments, corporations and individuals. As an investor one primary objective is to grow your money in real terms, to do so your return must be greater than inflation. So how to you invest during high inflation?. Whilst long term investment returns have done this consistently in modern history, we now find ourselves in a short term period where this isn’t the case due to high inflation.

Inflation directly means consumers are not able to purchase the same level of goods and services, therefore affecting investment markets. However some companies will find it easier during these times than others.

What should individuals consider when investing during high inflation ?

With this in mind what should investment managers look for in a stock to give greater protection against inflationary risk. In short, it is companies which are less exposed to inflationary risk that would be more secure. These are companies that have the ability to pass the cost of inflation on to investors without loosing consumers.



In times where consumers are questioning their expenditure and deciding where to cut back, they will often look towards the familiar and trusted brands. This can also be true for luxury items, where their customer base are generally not as price sensitive.

Pricing Speed

Some industries and companies are better positioned to increase prices in a timely manner. The quicker they can increase pricing, the less time their increased costs are eating into their profit margins. A prime example of this is comparing physical goods and services compared to online. Online only services and goods can quickly and easily adjust pricing.

less competitive Industries

If a company intends to pass on cost by increasing prices, they will have to consider what their competitors will do. In mature industries with greater concentration of market share, this can be easier to gauge. With a more concentrated market there is less competitor’s that may be willing to reduce margins in order to try and increase market share. This gives the industry leaders greater ability to increase costs without loosing customers.

Trimming the Fat

Companies who are very lean will not have the ability to cut costs to increase margins. This means companies in the same industry that may have a higher cost per sale could have lee way to cut their costs and keep their profit margins.

Long Term Contracts

Some industries and companies will operate on long term inflation linked contracts. These companies are generally protected over the medium term which can make planning easier.

Inflation proof revenue streams

Some industries such as payment services are charged on a percentage basis. Therefore, their revenue will be directly increased with the increase in unit prices. This of course could still be exposed to a reduction in transactions, however if the total transaction value increases, they are somewhat protected.



Investment returns are not guaranteed, and values can fall as well as rise. before receiving investment advice you should make sure the company is authorised to do so. The Financial Conduct Authority has a register of all regulated individuals and companies.