Beating rising prices

Higher prices are on the way. Commodity costs have skyrocketed, and companies as varied as Macy's and McDonalds have announced higher store prices are on the way. But don't be so fast to lay in extra supply before grocery and clothing prices rise. Kelli Grant, Senior Consumer Reporter for SmartMoney.com tells you what to consider:

Monitor price changes. Stocking up is a natural reaction to hearing about higher prices, but just because cotton or coffee is higher today doesn't mean jeans and your morning cup of java will be more expensive tomorrow. There's usually some lag time. Most companies buy supply ahead of time, so you might have a few more months of reprieve on some products.

Don't be wasteful. In theory, buying twice as much pasta or paper towels means you have a supply twice as long, but you're actually more likely to go through it at a faster-than-usual pace. Because you know you have a big supply, you're less conservative about use. Keep that in mind when you're deciding what to stock up on.

Anticipate your future needs to avoid some price hikes. Trendy clothing items have bigger price hikes than wardrobe staples, so comb the end-of-season clearances now to prepare for fall. If it's not on sale - wait. Back-to-school sales will get you better prices.

The best way to stockpile is on a small basis. Most grocery store items go on sale just once every three months, so if your favorite peanut butter or cereal is discounted right now, it's better to buy enough supply now so you don't need to pay full price in a few weeks.

Weigh the financial cost. When you stock up, you're locking in extra money now to avoid paying even more later. But if that keeps you from paying off your credit card bill, that math doesn't work out in your favor. Stocking up only helps if you save the proceeds, or can use them to stretch other areas of your budget.

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