Core Inflation Soars to 5.6%
August 14, 2008 by Brian J. Ritchey · Leave a Comment
The July Consumer Price Index was released today and core inflation soared to its highest rate since January of 2001. This follows a trend I noted on More Partner Income in March where I discussed the impact inflation has on your firm’s bottom line.
Inflation for the year is averaging 4.4%. Please keep in mind that inflation has averaged under 3% for the past two decades. Your forecasting needs to include the deflated value of your purchasing power. Expect the Federal Reserve to increase interest rates soon to counter the inflation threat.
UPDATE 8/15/2008: Federal Reserve officials state that although inflation is a concern, it will “fade over time“. They are even talking lowering rates. For those who hated Chairman Greenspan’s philosophy, it looks like we will see what it’s like to not be a hawk on inflation. My suggestion: save money.