It looks as if we're in for a period of sustained inflation. Food prices are rising across the world, so it might be a good idea to prepare ourselves for the idea of a $10 loaf of bread.

I was in the States last week, and found people in an extraordinary state of denial. The cost of a gallon of gasoline has risen to an average of something like $4 there, and people were screaming blue murder. Can't say I was terribly sympathetic; I would guess that the last time Bermuda residents paid as little as $4 a gallon was 10 years ago.

My understanding, from everything that I've read, is that the increase in the cost of gasoline is not just a temporary blip: it's here to stay. Similarly, food is going to cost more from now on, and will never come down in price.

The result will be that those workers with the clout to hold the rest of us to ransom, i.e. the unionised, will start demanding huge wage increases, some of them justified, some not. Either way, those workers will successfully wring their increases out of employers. That, in turn, will drive Bermuda's increasing prices even higher.

Government employees, as usual, will be protected. Their salaries will soar as prices do. Parliamentarians and business leaders will award themselves massive pay increases, but to be fair to such people, those pay increases will have nothing to do with current economic conditions. They routinely award themselves massive pay increases regardless of what's going on in the world.

The people who will be the most badly hurt are those on what are loosely called "fixed" incomes. Given the powerlessness of governments to affect global economic conditions, all the Federal Reserve has been able to do is to punish savers and those living off their investments. Pensions won't increase by anything like the rate of inflation, and older Bermudians will suffer the worst. Thus it always has been.

What can the rest of us do to get us through the next few difficult months or years? In theory, it should be harder for those with financial discipline than for those without. Those who are already watching the pennies will have less headroom to effect change than the people who just throw their money away. That's the theory: the practice is exactly the reverse.

Those who lack financial discipline in the good times tend to lack it in the bad times, too. I hate to point the finger, but the Bermuda Government is a good example. In the past few years, it has been steadily increasing its borrowing during the biggest boom in its history, overspending because, like all governments, it knows that it will not be in power when the chickens come home to roost. The theme song has been: let someone else - another government, your children - face the music.

Government is made up of people, and so the same applies to those in Bermuda who have failed to develop the saving habit. The time to learn it was in the past few years, when things were good. You won't find discipline easy to adopt when a beer costs $12, or a box of macaroni and cheese costs $8.

Of course, non-savers don't care. They close their eyes to their circumstances and hope for the best. Good luck to them. Not saving throughout one's lifetime is a lot like smoking. It feels OK while you're doing it, but when you reach the "golden" years, and look around for help from the cosmos, comes there none. The children of non-savers are then pressed into service to fund the wasteful parents' old age. Bad habits are passed down the generations and whole branches of families amount to nothing. The children of profligate parents are almost always profligate themselves.

There are a few things one can do to mitigate the pain that lies ahead. Shop wisely. Buy only what you need. Set money aside for the future. Do a little less of everything, rather than cutting out anything (the exception being anything that you spend money on that, upon reflection, you find you don't enjoy). Eat less - no joke, most Bermuda people being overweight. In case it helps, here is an analysis of the average American household expenditure. I know we're not Americans, but the yardsticks are essentially the same. I believe the figures are for 2007, but the source material is not clear on that subject. Take a look at your annual expenditure and see how you match up.

Of total spending for the year, this was the US national average:

• Housing: 42 percent.

• Transportation: 18 percent.

• Food and beverages: 15 percent.

• Health care: six percent.

• Education and communication: six percent.

• Recreation: six percent.

• Apparel: four percent.

• Miscellaneous: three percent.

Each category includes all associated expenditures. Thus, housing includes rent or mortgage payment, electricity, repairs, garden or lawn care, appliances, hotel bills, home insurance, cleaning products used at home, and so forth.

I doubt it will help, but here are my own percentages for 2007:

• Housing: 59 percent.

• Transportation: eight percent.

• Food and beverages: 14 percent.

• Health care: three percent.

• Education and communication: seven percent.

• Recreation: six percent.

• Apparel: zero percent.

• Miscellaneous: three percent.

My "housing" cost is far greater than that of the average US citizen, because I live in Bermuda. (My rent is actually only 13 percent of my total spend, but to that must be added the cost of electricity, cable TV, and the ridiculous amount I spend on hotel bills.)

My transportation costs are way lower than average, because I work at home. Yours should be, too. Bermuda is tiny, so getting around ought not to cost 18 percent of your total spend. I stopped buying clothes some years ago, when I realised I already had enough to last a lifetime. Otherwise, I'm fairly close to average.

I'm not sure if I learned much from the exercise, but I enjoyed doing it. Why don't you try? Knowledge is power, and if you know what you're spending, you'll have a better experience when the cost of everything goes through the roof in the next year or two.