Annuities are not often considered a good hedge against inflation; in fact, the primary risk of most annuity payouts is inflation. This is because commercial annuities generally pay a fixed monthly income, rather than an inflation-adjusted income. If your annuity pays a fixed $3,000 per month for life, and inflation increases 12%, the buying power of your annuity payments decreases to $2,640. Variable annuities that adjust with interest rates may offer better inflation protection than fixed annuities.