In recent months, inflation in the United States has reached the highest rate in more than a decade. Price increases have skyrocketed due to a number of unusual circumstances. Labor and materials shortages, gas prices, and the costs of groceries are just some of the primary results impacting every American. The inflation increase is also significantly impacting the overall cost of living, wages, and social benefits programs. Historically, inflation has moved around in response to recessions, first falling and then rising. The last time inflation was this high was during the great recession between 2007 and 2009.
Consumer Price Inflation Rising
A recent Consumer Price Index (CPI) inflation report, which measures changes in how much Americans pay for certain goods and services, showed that prices rose across the board in recent months. Prices climbed as high as 5.4%—the highest in 30 years. The inflation indexes for food, shelter and gasoline indicate the disturbing rise in inflation. These essential items are significant to the basic financial well-being of the average American, resulting in a stretch on all financial limits.
The inflationary trend consumers have experienced began in 2021 around the time of the Covid-19 pandemic and in conjunction with a change in governmental leadership. According to the Labor Department, prices have increased in the following categories over the past year:
- Gas: 42.1%
- Used Cars: 24.4%
- Rental Cars: 42.9%
- New cars: 8.7%
- Hotels: 18%
- TVs: 12.7%
- Furniture: 11.2%
- Meats, Poultry, Fish and Eggs: 10.5%
- Appliances: 7.1%
- Electricity: 5.2%
- Restaurant prices: 4.7%
- Rent: 2.9%
What Are the Factors in Current US Inflation
Many factors can trigger inflation, with demand-pull and cost-push inflation being among the most common types and both causing an increase in the overall price level within the economy. The causes of inflation in 2021 are more complex than historical inflation and are influenced partly by the government’s response to the pandemic. Similarly, other critical factors for the inflationary issues involve the sudden increase in demand, shipping shortages, layoffs, and host of other repercussions of the coronavirus lockdown restrictions that impacted the country and the world.
For months, economists have argued that inflation is temporary, yet prices have continued to rise. The average American is currently feeling inflation in their pocketbooks, as wages only grew by 4.6% compared to a year prior, far below the 5.4% price increase.
Inflation Concerns Drive Gold Prices Higher
According to Bloomberg, investors have begun to seek a safe have investment in gold. As inflation continues to remain high and stimulus packages wain (may not have helped in the first place), most every American is looking for investment alternatives.
The beginning of October 2021 saw spot gold going up 1.6% at a near four-week high of $1,788.01 per ounce. US gold futures jumped 1.6% to $1,786.60.
Other precious metals followed along, with spot silver rising 2.3% to $23.05 per ounce, platinum gaining 2% to $1,027.09 and palladium adding 4.7% to $2,142.30.
Investors often fear inflation because it affects their bank accounts, meaning the value of their cash money is decreasing over time. These declines predictably take place as the purchasing power of the dollar decreases.
For this reason, in times like these, investors turn to precious metals such as gold. The main attraction for gold as an investment is the notion that its value will rise steadily over time. Price dips do occur from time to time, but they are always temporary. Gold is the only type of asset, along with silver, that cannot be devalued or destroyed. While prices may rise and fall, gold always retains value.
Contact Reagan Gold Group today, while the market is still somewhat stable, to discuss the wealth factor of gold and how we can help you hedge against today’s inflation.
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