Inflation can be a scary word for people who are retired. It’s code for “prices are going up, but my income may stay the same.”
The most recent reading on consumer prices put inflation back into the conversation. The Consumer Price Index (CPI) rose 0.8% in April 2021 and jumped by a greater-than-expected 4.2% year-over-year.1
April’s increase was led by a 10% increase in used cars, with additional pockets of increases, notably in transportation services and commodities. Core inflation, which excludes the more volatile food and energy prices, was up a more modest 3.0% from April 2020.2,3
While there is good reason to be concerned about inflation, there also are compelling reasons to adopt a wait-and-see approach.
Federal Reserve Chair Jerome Powell says today’s inflation will be transitory and attributed to the post-pandemic economic expansion. But others are not so certain. Warren Buffett has said price increases are more structural, meaning they are becoming part of the prices we pay every day.4,5
We are keeping an eye on inflation and understand the concerns of our retired, or soon to be retired, clients. We work with professionals who monitor the economy and who can help interpret the recent government reports. But if inflation is starting to worry you, please reach out. We’d welcome the chance to hear your thoughts.
Damian J. Sylvia
Retirement Income Solutions
Office: 732-508-6044
Direct: 732-284-0902
Email: Damian@MyFinancialSolution.org
Website: RetirementSolutionsNJ.com
Sources:
1. CNBC, May 12, 2021
2. U.S. Bureau of Labor Statistics, May 12, 2021
3. U.S. Bureau of Labor Statistics, May 12, 2021
4. CNBC.com, May 3, 2021 5. CNBC.com, April 28, 2021