Beyond CPI: How to Fortify Your Portfolio Against Lingering Inflation Risks

While recent economic data hints at easing price pressures, savvy investors are wisely preparing for the potential resurgence of higher inflation. This week brought some relief with June’s Consumer Price Index (CPI) showing a 0.4% monthly decline, bringing the annual rate to 3.5% – a welcome cool-down from May’s 4.2% jump. However, the inflation battle is far from over.

The current 3.5% annual rate still sits above the Federal Reserve’s ideal 2% target. Compounding this, renewed hostilities involving the U.S. and Iran have pushed oil prices back above $80 a barrel, adding a geopolitical wild card to the economic forecast.

Kay Haigh, Global Head and CIO of Fixed Income and Liquidity Solutions at Goldman Sachs Asset Management, observed, “The well-behaved CPI print likely lowers pressure on the Fed to hike soon, but the reignition of hostilities in Iran means the prospect of hikes is far from over.” Indeed, U.S. crude futures have climbed nearly 23% since the Iran conflict began in late February, with international Brent futures surging over 20%.

For investors, safeguarding purchasing power against inflation is paramount. Here are several asset classes experts recommend to help your portfolio withstand inflationary pressures:

Treasury Inflation-Protected Securities (TIPS)

“TIPS are the cleanest direct hedge [against inflation] that exists, and they’re the most misunderstood,” says Jeff Judge, a certified financial planner at Chesapeake Financial Planners. Judge integrates these bonds as a component of his clients’ fixed income portfolios.

The principal value of a TIPS bond adjusts with inflation, paying a fixed interest rate semi-annually until maturity. At maturity, investors receive the greater of their original investment or the inflation-adjusted principal. However, TIPS are susceptible to duration risk, meaning longer-dated bonds will exhibit greater price volatility with interest rate fluctuations.

Rafia Hasan, CFA and chief investment officer of Perigon Wealth Management, notes, “You have the ability to adjust how much duration you’re going to take depending on which TIPS you buy, whether it’s a 5-, 10- or 30-year term.” Individual TIPS are available via TreasuryDirect.gov, or investors can opt for exchange-traded funds (ETFs) that hold TIPS through their brokerage.

Dividend Stocks

According to certified financial planner David Gilreath, a partner advisor at Allworth Financial, equities are a superior long-term inflation hedge. A WisdomTree analysis revealed that S&P 500 dividends grew an average of 5.78% annually between 1957 and 2019, outpacing inflation by more than 2 percentage points. S&P Global projects the index’s dividend to jump by 6.4% in 2026.

“Presuming that CPI stays below 6%, your income outpaces inflation,” explains Jenny Harrington, CEO of Gilman Hill Asset Management. “It really is that simple.” This stands in contrast to bonds, which often fail to deliver similar protection. “You have destruction of your spending power if you’re getting just your bond coupons and inflation is going up,” Harrington adds.

Harrington’s top dividend picks currently include Best Buy, Bristol-Myers Squibb, and Clorox. Best Buy (12.6x forward P/E) is a cash-rich, well-managed retailer with a 4.52% dividend yield. Bristol-Myers Squibb (9.4x forward P/E) boasts a robust balance sheet and strong drug-development pipeline, yielding 4.14%. Clorox (16x forward P/E), a “depressed consumer staples self-help story backed by category-leading brands,” offers a 5.17% yield.

Allworth Financial’s dividend portfolio features prominent names like Bank of America, JPMorgan, and Coca-Cola.

Real Estate Investment Trusts (REITs)

REITs provide investors with exposure to real estate portfolios and distribute dividends. The Vanguard Real Estate Index ETF (VNQ), for instance, currently yields 3.48% with a modest 0.13% expense ratio.

Northwestern Mutual recently shifted its REIT allocation from underweight to neutral, funding the move by reducing fixed income exposure. “Yes, inflation potentially could come back down to 2%, but there is a good chance that it does not, at least over the intermediate term,” states Matt Stucky, chief portfolio manager at Northwestern Mutual Wealth. Real estate owners can increase rents over time, allowing income to adjust with inflation.

Stucky sees particular opportunities in healthcare REITs and data centers, and he also favors telecommunications infrastructure. Allworth Financial’s REIT portfolio, overweight on healthcare, includes Welltower, Ventas, and American Healthcare REIT, according to Tom Kaiser, the firm’s director of equity management. Kaiser also highlights Simon Property Group for its effective management of high-end malls and experiential retail.

Commodities

Natural resources offer another avenue for investors seeking inflation protection. Commodity-focused funds have seen strong performance this year: the VanEck Commodity Strategy ETF (PIT) has advanced 37% in 2026, while the abrdn Bloomberg All Commodity Strategy K-1 Free ETF (BCI) is up 22% year-to-date.

Financial advisors caution that commodities, due to their dramatic price swings, should be used sparingly as a portfolio diversifier. Hasan of Perigon suggests allocating a maximum of 2% to 3% to this category. A potential drawback for investors is the tax complexity; some commodity funds are structured as partnerships holding futures contracts, necessitating a Schedule K-1 for tax filing, which can delay tax preparation.