Since the summer, inflation has been rampant as American consumers began to spend more freely. The release of pent-up consumer demand combined with trillions in stimulus spending has investors on edge for months as they expect prices to rise. Other factors such as the Fed’s increasing interest rates have compounded this rise in inflation. As of January 2022, inflation rates have broken new records – reaching their highest point since the 1980s. Indeed, the consumer price index (CPI) rose at a 7% percent year-on-year pace last month, a jump from the 6.8% seen in November and the most significant jump since June 1982. To address some of the inflation concerns, the White House has attempted to make moves in areas of the economy they can somewhat control. For example, reducing bottlenecks at important ports, cracking down on anti-competitive behavior, and promoting oil production globally to lower gas prices are all viable options pursued.
Despite this, some inflation-fighting strategies are untouched, such as removing tariffs on Chinese imports. So, what’s facilitating all this inflation? According to recent data, it appears that used vehicles and shelter costs are some of the most significant contributors to inflation. Used car prices continued to fly higher, increasing 3.5 percent from the previous month and almost 40 percent from a year ago. To counter inflation many investors, expand the diversification of their portfolios, including investments like rare earth metals, bonds, and even REITs. How do you plan to approach inflation in your portfolio?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.