Before learning how to deal with inflation, let's first understand what inflation actually is.

Inflation is a condition where the prices of goods and services in a country continuously increase over a long period. This occurs due to an imbalance between the circulation of money and the availability of goods. Another cause is the mismatch between supply and demand, which in turn can lead to higher export costs.

According to the International Monetary Fund (IMF), inflation refers to a decrease in the purchasing power of a currency over a certain period. This loss of purchasing power is evident when the same amount of money can no longer buy as many goods and services as before. As prices rise, people are able to purchase fewer items.

How Society Can Handle Inflation

Below are several practical strategies the public can adopt to cope with inflation and maintain their financial stability:

1. Save Money

One method recommended by the government under fiscal policy is to reduce spending. Lower consumption leads to decreased demand for goods and services, which can help reduce prices.

To save effectively, reassess your spending. Separate needs from wants. For instance, you could reduce the frequency of eating out or traveling. Remember, this doesn’t mean you must eliminate those habits entirely, but rather reduce how often or how much you spend on them.

What should you do with the money saved? It’s best to set it aside for emergency funds, investments, or to pay off debts.

2. Prepare an Emergency Fund

An emergency fund is vital as inflation can lead to salary cuts or layoffs. Having this backup ensures you can cover expenses even when income drops. It's a proactive way to protect yourself before a possible economic downturn.

Here are the general emergency fund guidelines:

• Single: 3–6 months of expenses

• Married without children: 6 months of expenses

• Married with children: 9 months of expenses

Ideally, your emergency fund should cover at least 3 to 6 months’ worth of basic needs. So, it's wise to begin saving for it as early as possible.

3. Generate Additional Income

Besides cutting expenses, securing extra income can improve financial resilience. This can be achieved through side jobs or running a small business.

4. Prioritize Domestic Products

Supporting locally-made goods helps reduce inflation. Purchasing imported products may lead to increased tax rates, which can worsen inflation.

While buying foreign goods might help with foreign reserves, it also raises tariffs and adds pressure on inflation. Therefore, it's better to prioritize domestic products as a way to fight inflation.

5. Save and Invest

Another solution is to save and invest your money. During inflation, it's better to invest in low-risk assets such as money market mutual funds or government retail bonds. These investments often yield returns higher than the inflation rate and help preserve your purchasing power.

You can also save money in banks—especially those offering high interest savings, such as Bank Universal BPR. Unlike time deposits, savings accounts allow you to withdraw money anytime without waiting for maturity.

6. Invest in Precious Metals

Investing in precious metals is another good hedge against inflation. These assets are low-risk and tend to rise in value over time. They are resistant to inflation's effects and can even appreciate steadily each month.

Today, many platforms allow you to invest in precious metals online, making it even easier to start allocating funds toward them.

7. Buy Government Bonds (SUN)

Purchasing government bonds on the open market is another effective strategy. This not only helps the government manage its debt but also offers you returns in the form of interest, helping counter inflation.

8. Time Deposits

Time deposits are a solid investment option because their interest rates are typically on par with inflation. This means your money retains its value. However, make sure not to withdraw before maturity to avoid penalties.

Deposits are one of the easiest and safest ways to protect your funds. They offer low risk with stable returns—an ideal choice for those seeking financial security amid inflation.