With much talk of inflation, and to be fair, much coming from our mouths as well, we decided to post a series of thoughts concerning inflation.
What is Inflation?
Investorwords.com has the following definition
“The overall general upward price movement of goods and services in an economy, usually as measured by the Consumer Price Index and the Producer Price Index. Over time, as the cost of goods and services increase, the value of a dollar is going to fall because a person won’t be able to purchase as much with that dollar as he/she previously could. While the annual rate of inflation has fluctuated greatly over the last half century, ranging from nearly zero inflation to 23% inflation, the Fed actively tries to maintain a specific rate of inflation, which is usually 2-3% but can vary depending on circumstances. opposite of deflation.”
In less technical terms, too much demand chasing too little supply.
What is the long term Inflation rate as measured by the CPI (Consumer Price Index)?
More to come soon. JK