From an interview on Clusterstock:
Everybody is paying higher prices for oil and that obviously impacts consumption everywhere. It’s not just oil, it’s food and everything else that’s going up. There’s inflation everywhere, the U.S. lies about it. I mean, the U.S. government lies about inflation but there’s inflation everywhere. I mean, I don’t know if you go shopping, but if you do, you know prices are up. The government says they’re not. I don’t know where they shop. Everybody else’s prices are up.
There’s obviously inflation in Mr. Roger’s neighborhood. Based on the Everyday Price Index, inflation is a lot higher than the reported CPI. They’re different measures, but depending on what you buy, your personal inflation rate could be a lot different than the government’s.
The market doesn’t seem to be reacting strongly to inflation pressures right now, but there is no telling if that will change in the future. Some asset classes respond poorly to inflation, but others perform well and can act as inflation hedges.
I don’t get the sense—judging from the public’s heavy bond buying—that inflation is on the radar for most investors. It’s probably wise to have an investment policy that is flexible enough to include inflation hedges if they are needed. Or you could just let a manager handle the global tactical allocation strategy for you. I’m just saying.
Source: CNBC (click to enlarge)
