Inflation

Inflation hit 5% this year. Is this accurate?

Everywhere prices increased by 10%, some increase 50 cents, some up by $1.

What is CPI?

Consumer Price Index (CPI)

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.

Inflation represents one the greatest threats to long-term investors, as it erodes the value of future dollars. Inflation can stifle economic growth.

As inflation rises, purchasing power decreases, fixed-asset values are affected, companies adjust their pricing of goods and services, financial markets react and there is an impact on the composition of investment portfolios.


How to reduce or beat the Inflation?

One thing is clear: investors need to maintain a blend of equity and fixed-income investments with adequate real returns to address inflationary issues.