Good Financial Reads: Coping with Inflation

Inflation has been a hot topic the past few months. For a lot of us, inflation isn’t something we generally really think about because it’s kind of a ‘hidden’ cost. If the price of a 50 cent apple goes up 3%, you’re probably not going to notice the extra 1.5 cent cost and it’s probably not going to stop you from buying it.

We’ve been quite vocal over the last 18 months about our views on inflation. Namely, that we are shifting away from a 40-year period of low inflation to a new regime of higher and stickier inflation. We still firmly believe this to be the case. But economies move in cycles. And to steal a phrase from theater, we may be in the closing chapter of Act 1, “Inflation Makes a Comeback,” thanks to the Russia invasion. This month’s newsletter looks at how we think the inflation story may play out over the rest of 2022, trying to answer the question, “Will we get relief from inflation?”

Do you ever feel old when you remind yourself that something you bought, many years ago, is now a lot more expensive today?  I’m going to give you a couple of examples from my own life. The first one is from when I was really young. I remember in our really small town we would ride our bikes to a small grocery store. I could buy a piece of gum for three cents or five cents. This was just an individual piece of bubble gum. Today, I don’t think you can even buy them in a store individually. If you can, it’s around 25 cents.