However, they operate a bit differently. And depending on how you use them, they can help protect your purchasing power.
As the U.S. continues moving back to pre-pandemic economic activity and the Biden administration s stimulus efforts juice the recovery, inflation has been on the minds of many investors. The consumer price index rose 0.8% in April from March and 4.2% from a year earlier the highest since September 2008 and above the expected 3.6% increase.
In addition, the Federal Reserve has indicated its willingness to let inflation run hotter than the standard 2%. And given where the economy was a year ago largely shut down due to the pandemic, with year-over-year inflation virtually nonexistent it s uncertain at this point whether the jump in prices will be short-lived or more of a longer-term reality.
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Many factors are playing into the price hikes. Consumers are putting their stimulus checks and enhanced unemployment benefits to work. As the economy strengthens, demand for products is outpacing manufacturers’ ability to produce enough supply of the raw materials. Many manufacturers are still understaffed as employment lags the broader economic recovery. Companies are also paying more for shipping as fuel costs rise and ports experience longer delays because of congestion.
“Inflation is the cost of an expanding economy,” certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York, told CNBC.
CONSUMER GOODS
Everyday consumer items are about to get more expensive as the building blocks of those products become pricier.