Inflation erodes wealth. A way to counter the threat of rising prices is by investing in so-called real assets such as gold and real estate.
Central banks have flooded the markets with cash, oil prices continue to rise, and emerging market economies are growing rapidly. That means inflation is very likely to increase in the years — if not months — ahead.
The government’s measure of inflation, known as the consumer price index, or CPI, showed that inflation increased 2.9% in January from a year earlier. That’s lower than the average rate of 3.6% since 1980. However, John Williams, an economist at Shadow Government Statistics, thinks those numbers are grossly understated given the changes in CPI calculations. If inflation were measured the same way it was in 1980, the average increase over the past 30-plus years would be 7.7%, he says.