FNC
By Terry Keenan, host of "Cashin' In" (Saturdays at 11:30 am ET on FNC)

Four dollars for a gallon milk, three dollars for a gallon of gasoline, and here in Manhattan one four-star restaurant is even serving a $1,000 omelette.   Yes, everywhere you look these days prices are going up.  In some cases the sticker-shock is merely annoying, in other cases (a $100 million Picasso?) often outright absurd.

It's been more than 20 years since most Americans have had to think much about inflation.  In recent years, a vigilant Federal Reserve, plentiful oil, a strong dollar, and cheap imports from Mexico and Asia have helped break the back of the inflationary beast.  With prices increasing at a reliably tame two to three percent, businesses have been able to forecast costs and profits more easily, while workers have refrained from asking for big pay raises.

That may be starting to change.  Although the official inflation numbers still show consumer prices running at less than a three percent annual rate so far in 2004, the tide has clearly shifted from last year when deflationary pressures were still evident in the economy.  Runaway oil prices are now greasing the inflationary skids.

It's the Federal Reserve's job to quell inflation before it gains much momentum. That's why Wall Street now believes Alan Greenspan and company will begin raising interest rates this summer. But those interest rate increases carry some risks as well.  If the Fed raises rates too far and too fast in the face of a huge upturn in oil prices, Greenspan could risk triggering a bout of so-called "stagflation" reminiscent of the economy in the 1970s.

Back then, inflation rose to double-digit levels as economic growth in the U.S. sputtered. Few expect inflation to flare to that extent again, but for the first time in nearly a decade companies are experimenting with small price increases to see if they'll stick.  Last month,  the Walt Disney Company hiked ticket prices at its theme parks, Kleenex prices will go up 5 percent this summer, and Starbucks says it may have to raise prices for the first time in 4 years due to the rising cost of milk.

Unfortunately, one place where there's been no inflation this year has been the stock market. While a little inflation is often good for corporate America's bottom line, Wall Street often sputters on fears of growing pressure on wages or imminent interest rate hikes from the Federal Reserve. So far,  this year has been no different.

So how do you protect your family's finances in a period of rising inflation?

• First, take a look at your debt.  Rising interest rates means those compelling adjustable rate loans won't look quite as good any more.  Consider switching your mortgage from adjustable to fixed-rate, and pay down credit card debt before those sky-high credit card rates tick up even higher.

• Spend less.  No easy task, but the less you spend, the less you're hurt by rising prices.  Use the Internet — a tool not available the last time inflation reared its ugly head — to bargain-hunt and comparison shop .

• Review your investments.  Hard assets such as real estate and art tend to do better in inflationary environments as opposed to financial assets like stocks and bonds.   This is a big shift from the last two decades when both stocks and bonds were in a major bull market.   The Treasury Department also now sells inflation-protected securities called TIPS.  If held to maturity, TIPS will give you the return of a standard 10-year treasury bond plus protection against inflation.

Of course, the jury is still out on whether inflation is here to stay, but financial planners say it never hurts to be ready for the possibility of a rising price environment before it becomes a reality.