11 June 2023
Kind of like the uncle who keeps sticking around long after dinner has ended, inflation is proving hard to say goodbye to.
Ten interest rate hikes later, the Federal Reserve still hasn’t stuffed the inflation genie back into the bottle – as the central bank battles with the highest levels of inflation in the United States since the early 1980s.
New data reveals that despite the most aggressive interest rate hike campaign in history – inflation still isn’t slowing and it’s hot, hot, hot, which means the Fed will likely keep on raising interest rates this summer.
The Personal Consumption Expenditure (PCE) price index headline number jumped 4.4% for the 12 months ending in April, the Commerce Department reported.
The Fed’s preferred inflation gauge and more closely watched core PCE index – which strips out volatile food and energy costs – unexpectedly climbed 4.7% for the year. Surging goods prices led the index higher, including price increases for motor vehicles and parts. Spending on financial services and insurance led the services portion of the index.
Overall prices for services, which include items like medical care, transportation, and hospitality hit, an annual increase of 5.5%. Food prices skyrocketed 6.9% on an annual basis in the latest report.
The overall inflation number is still more than double the Fed’s inflation target at 2%. And, still rising prices of goods and services reveals that inflation has yet to be tamed.
The Fed meets next on June 13-14 and the report triggered speculation the central bank may need to hike again at that time.
Gold has proven diversification properties
As the government fails to put out the inflation fire – the spotlight shines brightly on gold. Throughout history, gold has served as a stable medium of exchange, a hedge against inflation, and today it serves investors well as a private investment outside the global financial system.
Gold and silver bullion ownership serve investors well as safety nets and insurance for their wealth. Allocating up to 10% of your portfolio to precious metals is a prudent diversification method with proven results to reduce volatility in long-term portfolio returns.
As the purchasing power of your paper dollars is eroded every day by inflation, have you considered if now is the time to trade more of those dollars for a hard asset like gold to protect and grow your wealth?
Want to read more? Subscribe to the Blanchard Newsletter and get our tales from the vault, our favorite stories from around the world, and the latest tangible assets news delivered to your inbox weekly.
The post New Data Shows Inflation Is Still Hot, Hot, Hot appeared first on Blanchard and Company.