We at De Thomas Wealth Management have been reading how inflation has reared its ugly head. We all have been seeing the upward movement in the overall price level of goods and services and the big question will the central banks from around the world attempt to slow inflation by raising rates sooner and faster than expected. I can remember when interest rates were 12% and today, they are around 1% - 3%.
We do not need to read about inflation, we can see it everywhere we go at the gas station, supermarket, and car rentals. Inflation pressures are also brewing in the labor market, where there seems to be an acute shortage of workers, and this is driving wages higher. This is the first time that millennials have seen this in the markets.
The Consumer Price Index (CPI) jumped 0.9% last month after climbing 0.4% in September according to the Labor Department. This is the largest gain in four months, and it has hoisted the annual increase in the CPI to 6.2%. This has been the biggest year-on-year rise since November 1990 and followed a 5.4% advance in September. In the past couple of decades, inflation has been around 2%.
Things to Consider:
Will this continue or will it be transitory and for how long?
Will the Federal Reserve in the United States start raising rates in early or late 2022?
Will the Bank of Canada beat the Federal Reserve in raising rates?
Truthfully, nobody knows.
Investors wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks.
If you would like to discuss your portfolio and how you can save on fees, please let me know.
Richard Ler, CFP® , B.Comm, RRC®P: 905 731 9800 ext 230C: 416 573 0476Email: [email protected]Web www.dethomaswealth.com
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