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Inflation Creeping Up

Discussion in 'Economy' started by ethics, May 30, 2014.

  1. ethics

    ethics Pomp-Dumpster Staff Member

    The report on consumer spending provided the latest evidence that inflation was starting to stir.

    Prices rose 0.2 percent in April, pushing the year-on-year reading up to 1.6 percent - the largest gain since November 2012. It had advanced 1.1 percent in March.

    Excluding food and energy, prices increased 0.2 percent. These so-called core prices were up 1.4 percent from a year ago, the biggest increase since March 2013.

    The pick-up is welcome news for Federal Reserve officials, who have been worried that inflation was running so far below the central bank's 2 percent target.

    Weak medical care costs has kept inflation down but that anchor is slipping away. Economists say a rise in those costs plus increasing rents should lift inflation this year and pave the way for an interest rate hike from the Fed. (Full Story)

    "We believe the inflation backdrop will keep the Fed on a gradual path to normalization and look for the first rate increase in June 2015," said Michael Gapen, an economist at Barclays in New York.

    The Fed has held benchmark overnight interest rates near zero since December 2008.

    These are, of course, official records. If you knew how it was gathered, you'd know that these figures are a shot in a dart board. Personally, I think the inflation is around 6% but that's just me.

  2. tke711

    tke711 Oink Oink Staff Member

    Soon to hit 40% if they count energy after Obama's EPA restriction come out. :)
  3. ethics

    ethics Pomp-Dumpster Staff Member

    LOL I am sadly laughing. Very sadly. :p
  4. Greg

    Greg Full Member

    I put the real inflation rate at 6-7 percent. That would be the index that includes food and fuel. Never mind that the price of cars is becoming more affordable. Could that be because there is a lesser demand because fewer people can afford new cars?

    I have my own way to deal with inflation. I just put down about a third of my net worth buying rental houses (not in California, LOL!) and leveraged at 25% down and the bank holding the rest of the paper. With fixed rate mortgages and my bank as 3/4 owner they are going to be the ones who take inflation up the ass. Meanwhile as the dollar drops I'll be able to increase the rent on my 1/4 of the deal, maybe avoid inflation on my part entirely. I have been working on this project for the last 6 months and I'll have my position secured before the end of this month.

    My advice for everybody: Make a plan that has you not taking inflation up the ass.

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