High Inflation Rates Impact Almost Every Aspect of Our Lives, Including Mental Health

Recently, it feels as if every purchase serves as a reminder of inflation. Things that used to seem affordable have suddenly become unattainable or shocking as the cashier rings them up. If all this talk of inflation is confusing and overwhelming, you are far from alone.

So, what exactly is inflation? The International Monetary Fund defines inflation as “the rate of increase in prices over a given period of time.” Inflation can be considered a broad determination of many goods and services or only specific ones at a time.

In June, United States inflation reached a four-decade high at 9.1%, reports the Bureau of Labor Statistics. Food, gasoline, and shelter inflation rates were most pronounced. So, why is inflation occurring at such a rapid speed right now? According to Dr. Jaime Peters, the assistant dean and assistant professor of finance at Maryville University, there are a few related reasons, including:

• The COVID-19 pandemic disrupted supply chains, and companies can charge a higher amount for their goods.
• There is a labor shortage, which allows people to ask for a higher wage, and costs more to the company.
• Russia’s horrific invasion of Ukraine has meant more countries competing for oil from the Middle East instead of buying from Russia.

Inflation’s Impact on Mental Health 

It’s easy to feel overwhelmed and worried when inflation increases faster than expected. According to Kara Nassour, a licensed professional counselor with her own private practice, inflation has two main effects on mental health: financial stress and uncertainty. 

“It decreases the power of the money you have, which can increase stress around finances. Financial stress can create chronic anxiety, exhaustion, strained relationships with partners, and prevent a person from getting housing, education, or healthcare,” says Nassour. “Poverty itself can be traumatic.” These issues can be further exacerbated for single-parent families and others facing a significant drop in their standard of living.

Nassour adds that this stress around expenses couples with the mysterious nature many people feel around inflation. “Most people don’t know why it happens, how to stop it, or how fast it will rise,” she explains. “This makes it difficult to plan for the future or save money for future purchases like college or a home. In ‘hyperinflation,’ the value of money drops so quickly that people start withdrawing from their bank accounts and buying goods to sell later because they’re afraid their savings will become worthless. That leads to an increased sense of instability, anxiety, cynicism, and loss of trust in the government.”

According to Hazel Navarro, a licensed independent clinical social worker with her own private practice, people may experience physical or mental pain such as loss of sleep, low energy, irritability, headaches, and other muscle pains. 

There is also the issue of this uncertainty and hopelessness coming on the heels of a similarly tumultuous and mentally and financially challenging time: the pandemic. As if that’s not enough, this period can also cause many people to flashback to the 2008 recession and begin to fear troubles will reach the same level. 

On top of all that, people are getting priced out of therapy due to increasing rates or needing to spend money on other things. A recent study from Verywell Mind found that 48% of people would be unable to pay for therapy if the rate increases and 38% have required help from someone else to pay for their therapy. In fact, about one-third of people have reduced the frequency or stopped attending therapy sessions altogether due to finances. 

While seeking help for mental health is certainly as critical as physical health, it can often feel less urgent or be dismissed as a luxury expense—leaving people to deal on their own at an incredibly anxious time. Of course, when money is tight, people may not be able to afford either physical or mental healthcare due to the exceptionally high healthcare costs in the United States.  

Navarro recommends checking if your insurance policy includes any in or out-of-network mental health providers, even if it’s a reimbursement of part of the rate you pay out of pocket. 

Financially Savvy Tips

There is no ignoring the fact that inflation, especially when it occurs at a fast rate, can be quite detrimental to people’s standard of living and create a challenge for many people. With that said, some tips may help limit inflation’s negative impact on you. 

Budgeting

The first and likely most obvious tip is to create a budget. Peters recommends adjusting your budget every quarter due to the high inflation. In addition to the explicit reason to create a budget—saving money—it can significantly help your mental health.

“In the absence of a budget, your mind is likely to make more negative assumptions about where things are at,” says Dr. Marie-Helene Pelletier, PhD, MBA, an award-winning work psychologist and expert in resilience and workplace mental health.

Pelletier continues, “It is also possible that your mind is making unrealistically positive assumptions—but sort of knows they are not real. One way or the other, the budget will help you have clarity on the situation and provide a direction on next steps.”

Take Public Transportation When Possible

With gas prices soaring, Peters recommends walking, biking, or opting for the bus any chance you get.

For anyone who lives in an area where driving is required to get anywhere, consider planning what you need before heading out to avoid repeat trips, and try carpooling with people who live close to you. 

Look Into A Cost of Living Adjustment

As Peters explains, “If you have not gotten a good-sized raise recently, you are making less than you did a year ago. You need to let your employer know that you are in need of a raise.” Ask politely with precise data to back up the request.