Recently, I started reading about deflactation, and honestly, it’s a concept that many people ignore but that directly affects our wallets. Especially in 2022, when inflation skyrocketed across Europe and the United States.

Basically, deflactation means adjusting economic figures to eliminate the noise of inflation and see what’s really going on. Imagine that your salary increased by 5%, but inflation was 10%—in reality, you lost purchasing power. That’s the adjustment this is meant to correct.

In Spain, there was a lot of debate about deflacting the IRPF, which is a deflator applied to tax brackets. The idea was that if your nominal salary rises due to inflation, you don’t end up paying more taxes on money that is actually worth less. That makes sense, doesn’t it? However, other countries like the United States, France, and the Nordics already do it every year for years. Germany every two years. We haven’t done it at the national level since 2008.

So what does this mean for our investments? Quite a lot. If they deflated the IRPF, you’d have more money available, and that could lead you to invest more. But here’s the interesting part: not all assets respond to inflation the same way.

In commodities, gold is the classic. When everything falls apart, gold holds its value. It isn’t tied to any economy. In 2022, we saw it: while bonds were sinking, gold held up. It’s not infallible, but historically, over the long term, it has always gone up.

With stocks, it was more complicated. Inflation + high interest rates = a nightmare for most companies. But not all suffer equally. Energy companies posted record profits while tech collapsed. The key is to be selective.

Forex is risky. When inflation is high, your currency depreciates. It can be an opportunity if you know what you’re doing, but it’s volatile and requires experience.

The reality is that deflacting the IRPF won’t make you rich. We’re talking about savings of a few hundred euros for the average person. What matters is understanding what a deflator is and how it works, so you can make better investment decisions. Diversifying is still the golden rule: mix stocks, commodities, and bonds. Don’t let inflation catch you off guard.