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  • bee February 12
  • hank February 12
  • msf February 12
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Inflation heats up

Sven
in Other Investing
The Federal Reserve’s preferred inflation gauge moved even higher in December, driven largely by rising energy prices as well as food. However, a closely watched measurement of underlying inflation trends indicated some progress in the fight to rein in price hikes.

The Personal Consumption Expenditures price index rose 2.6% in December from the year before, heating up from November’s 2.4% increase, according to new Commerce Department data released Friday.

On a monthly basis, prices rose 0.3% as compared to 0.1% in November.

https://cnn.com/2025/01/31/economy/us-pce-inflation-consumer-spending-december/index.html#:~:text=The%20Federal%20Reserve's%20preferred%20inflation,to%20rein%20in%20price%20hikes.

Food price is rising in our area with eggs at $10/dozen, and the supply is limited. FED will likely to keep the rate high and longer through 2025.

Comments

  • hank
    edited February 12
    ”The consumer-price index rose 3% in January from a year earlier, an acceleration from December's rate, and faster than economists had expected.” (Excerpt from today’s WSJ)

    Yeah - If sustained longer term, 3% annual would be significant. But nothing like the 10-12% annual increases some of us “middle-aged” folks endured back in the late 70s or early 80s.

    I’m a bit surprised the frenzy in eggs that has arisen. Not that healthy in a diet. But, ISTM the Prez did stress them in campaign appearances. So they must be a hard act for him to swallow. Maybe impose a federal limit on how many you can buy at one time until this blows over?
  • beebee
    edited February 13
    Inflation is the delta to new price levels. When inflation "inflates prices", prices of things often remain at these new price levels until the next round of inflation deltas prices higher.

    The 70's saw inflation step up over and over again. That was difficult on the economy (and the people who operated within it).

    Longer term it's these new sticky "higher price levels" we have to contend with and struggle to afford.

    Workers:
    Wage inflation can help us keep pace with these new higher prices, but technology (and it's deflationary efficiencies) can negatively impact jobs and wages which might be the very thing 25- 65 year old workers don't need to help them keep pace with inflation.

    Seniors:
    Seniors often have nothing but there nest egg to crack over inflation (higher prices). Taking risk in the market or owning/renting real estate is challenging for senior, but may be some of their best options to fight inflation.
  • msf
    Seniors often have nothing but there nest egg to crack over inflation (higher prices).

    IMHO this is one of the strongest reasons to defer taking SS as long as possible. Rather than taking SS at full retirement age (FRA) or earlier and investing the extra assets in, well, fixed income, one might spend down those assets when they are worth more and implicitly "invest" in a larger future SS income stream. That stream is designed to keep up with inflation, more or less, as opposed to being fixed.

    Of course this assumes that one has those assets to spend down (or is working more years) to be able to defer SS. Many people cannot do that.
  • hank
    edited February 12
    The toughest thing for me to deal with is an unwillingness to pull equity out of the home for major infrastructure projects. At 7% APR or more on a refinance, I’m not willing to bite. But funding major renovations from tax deferred / exempt savings is also problematic.

    A tough egg to crack.
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