It's been impossible not to notice inflation this year.
June's CPI print came out this morning at 9.1 %, the highest on record in my lifetime. (Since 1981)
If you are worried about lasting high prices - here are 3 reasons to maintain optimism for the future:
𝟭.) 𝗠𝘂𝗰𝗵 𝗼𝗳 𝘁𝗵𝗲 𝘄𝗼𝗿𝘀𝘁 𝗶𝗻𝗳𝗹𝗮𝘁𝗶𝗼𝗻 "𝘀𝗵𝗼𝗰𝗸" 𝗶𝘀 𝗯𝗲𝗵𝗶𝗻𝗱 𝘂𝘀.
The U.S. stock market has pulled back ~20% and entered a bear market on the fears of inflation and economic growth.
The stock market is a 𝘭𝘦𝘢𝘥𝘪𝘯𝘨 indicator of the economy, and much of the selling the last 6 months has been due to the fear of the current inflationary environment and slowing economic growth.
I am in the camp that the worst of the selling in the stock market is behind us- time will tell if I am correct.
𝟮.) 𝗖𝗼𝗿𝗲 𝗶𝗻𝗳𝗹𝗮𝘁𝗶𝗼𝗻 𝗰𝗮𝗺𝗲 𝗶𝗻 𝗮𝘁 5.9%, 𝘀𝗵𝗼𝘄𝗶𝗻𝗴 𝘀𝗶𝗴𝗻𝘀 𝗼𝗳 𝗼𝗽𝘁𝗶𝗺𝗶𝘀𝗺.
Inflation is broken into 2 parts- Headline & Core Inflation.
Headline inflation is primarily used in comparing purchasing power year over year, however it includes food & energy prices.
Core inflation 𝘰𝘮𝘪𝘵𝘴 food and energy prices, which are highly volatile in price.
Core inflation is the preferred metric in predicting 𝘧𝘶𝘵𝘶𝘳𝘦 inflation rates.
This number coming down is a good sign.
𝟯.) 𝗘𝘃𝗲𝗿𝘆 𝗶𝗻𝗳𝗹𝗮𝘁𝗶𝗼𝗻𝗮𝗿𝘆 𝗽𝗲𝗿𝗶𝗼𝗱 𝗶𝗻 𝗵𝗶𝘀𝘁𝗼𝗿𝘆 𝗲𝘃𝗲𝗻𝘁𝘂𝗮𝗹𝗹𝘆 𝗲𝗻𝗱𝘀. (𝗘𝘃𝗲𝗿𝘆 𝘀𝘁𝗼𝗿𝗺 𝗿𝘂𝗻𝘀 𝗼𝘂𝘁 𝗼𝗳 𝗿𝗮𝗶𝗻)
It is very hard to predict the future.
The greatest economists, investors, and writers alike have never been able to fully pin a market bottom or price top perfectly.
The only constant in all of our historical inflationary data is that it does eventually stabilize.
I can't guarantee if it's next month, next quarter, or next year-
But I can guarantee you that this too shall pass.