Inflation? What? Now? Yes. It’s a jolt, but in raising short-term interest rates recently the Federal Reserve said for the first time in four years that it was worried about rising prices. Inflation has been so low for so long it was easy to assume we’d never have to worry about it again.

No one expects the kind of galloping, double-digit inflation we suffered in the ’70s. But even a modest rise in inflation can do very serious damage over the long term.

With inflation at 2 percent a year, a dollar put aside today would buy 67 cents worth of goods and services in 20 years. At 4 percent, its purchasing power would fall to 46 cents.

The inflation rate was 3 percent for the 12 months ended in February.

Fortunately, there are a number of ways to counteract the effects of rising inflation:

• Save more. Let’s say you’re starting from scratch and want to have a nest egg in 20 years that will buy what $100,000 buys today, and that your investment portfolio will return 7 percent a year. If inflation averages 2 percent a year, you’d have to invest about $3,600 each year. At 4 percent, you’d have to invest about $5,300 a year.
• Buy stocks. Over the long run, stocks offer higher returns than bonds and cash, and thus provide better inflation protection. A share of stock represents part ownership of a company. As inflation rises, the company’s employees will push for raises and the company will have to pay more for the raw materials and other things it buys. But it may offset that inflation damage by raising prices on its products and services, and its buildings and other holdings probably will rise in value as well.

Over long periods, stocks have thus enjoyed annual returns of 6 to 8 percent on top of inflation. Cash, such as bank savings and money market accounts, tend to lose money when inflation is taken into account. Long-term bonds may make only 2 or 3 percentage points above inflation in the long run, and they tend to lose money during periods inflation and interest rates are rising.

• TIPS. This stands for Treasury Inflation-Protected Securities, sold by the U.S. government. Every six months, the government adds money to the principal you have invested to offset the inflation during the previous six months. The bond’s interest rate, or yield, is then multiplied against this ever-rising principal.

You won’t get rich with TIPS, as they usually pay only a percentage point or two above inflation, but you will preserve the purchasing power of your money. You can get information and buy TIPS directly from the government at www.treasurydirect.gov. A number of mutual funds hold TIPS. Find them at www.morningstar.com.

Some companies also offer corporate bonds with similar inflation protection. Check them out at www.internotes.com.

• Savings bonds. There are two types, each offering a form of inflation protection. The inflation-protected type, called the I bond, pays interest in two parts. First is a fixed rate that stays the same for the bond’s 30-year life. Second is an inflation rate that is adjusted every six months according to inflation.

The second is the EE bond. Its rate adjusts every six months to equal 90 percent of the rate paid by the five-year U.S. Treasury note. As inflation rises, rates on Treasuries tend to go up as well, so the EE bond protects against inflation pretty well.

Currently, I bonds pay 3.67 percent, EE bonds 3.25 percent. Rates on both types will change May 1. Go to the treasurydirect Web site above for information.