Inflation is a topic that often grabs headlines and sparks concern among investors. However, it’s important to understand that not all inflation is bad for your financial well-being. In fact, a controlled and moderate level of inflation can bring certain benefits to your investment portfolio and overall wealth management strategy. In this article, we will explore why some inflation can be advantageous for investors.
With the economy stronger than expected and inflation cooling fast, it’s a Goldilocks economy, and the outlook for 2024 is brightening.
The 12-month rate of inflation plunged again in June, as measured by the Consumer Price Index. CPI measures inflation based on prices of a fixed basket of monthly household expenses. The Headline 12-month rate of inflation – the rise in the cost of all the items in the fixed basket household expenses — declined to 3% from 4% in May. It was the second month in a row in which the 12-month rate of inflation declined a full percentage point.
Inflation, as measured by the Consumer Price Index, rose a scant 0.1% in May on a seasonally adjusted basis, and the Federal Reserve may be done with raising interest rates, while economic growth is stronger than expected. The list of bullish fundamentals is much longer than the list of bearish signals, and a turning point in the outlook could be taking hold.
The U.S. economy created 311,000 new jobs in February, exceeding expectations of 225,000, according to the Bureau of Labor Statistics. The unemployment rate edged upward to 3.6%, but remains just above its lowest point in decades.
The 12-month rate of inflation rose in January, according to newly released data. The Personal Consumption Deflator Expenditure (PCED), the inflation index cited by the Federal Reserve in its policy statements, rose to a 12-month rate of 5.4%. The annualized rate of inflation had been expected to decline, but it rose from 5.3% in the 12 months ended December 2022 to the 5.4% annualized rate. It was a disappointment. It means the aggressive monetary tightening campaign begun in March 2022 may be extended.