Without looking at inflation-adjusted prices it is difficult to see where gasoline prices actually stand. Back in 1918 gasoline was $0.25 a gallon and by 1932 prices had fallen to 18 cents a gallon! But as we all know over the last 100 years the purchasing power of the dollar has fallen drastically so in order to get the true picture we can’t just say that the lowest price of gas was 18 cents per gallon, we need to adjust the price for inflation. When adjusting for inflation there are two prices… the first is called the “nominal price” and that is the actual price you would have paid for gas at the pump. The key price though is the inflation-adjusted price which calculates what the price would have been if we were spending current dollars on a specific date. In this case, we are basing our calculations on the value of a dollar in January 2020.
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4 Key Factors to Consider When Hedging Against Inflation
The FED's target yearly inflation rate in the U.S. is about 2%, but the long term average is more like 3% and depending on ongoing economic conditions, this rate can significantly increase, affecting the financial health of individuals across the country. Though keeping an eye on the economy can help you make decisions to brace against the impact of inflation, developing sound investments can help you protect your wealth no matter the rate. Take a look below for a few central items to consider … [Read More...]
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Navigating Economic Turbulence: How Inflationary Pressures Drive Payment Fraud Trends
In an era where economic landscapes are perpetually shifting, understanding the nuances of inflationary pressures is paramount for businesses and consumers alike. These pressures do not operate in a vacuum; rather, they catalyze a series of reactions across various sectors, notably in the realm of payment fraud. As inflation distorts purchasing power, fraudsters exploit emerging vulnerabilities, leading to sophisticated scams.
March Inflation Causes Market Concern
The U.S. Bureau of Labor Statistics CPI report released on April 10th, showed Annual Inflation was up from 3.2% in February to 3.5% in March.
(but since we calculate it to two digits, it was actually 3.15% in February and 3.48% in March.)
Monthly inflation was 0.62% in February and 0.65% in March. Typically inflation is highest in the first quarter of the year, so these numbers are a bit high but not that unusual. In March 2023 monthly inflation was 0.33%, so annual inflation jumped in 2024. Mr. Market didn’t like the news because it drastically reduced the chances of a rate cut anytime soon. So, stocks fell on the release. The NYSE opened at 18,171.20 and that was the high for the day. It closed down almost 224 points or 1.2%. As of this writing, declines are continuing the next day.
Although we projected a moderate increase for March, you can see from our MIP projection from last month, inflation was above the high end of our range. Indicating, that inflation pressure still exists.
Hyperinflation- How a Trickle Can Turn into a Flood
German Hyperinflation: By 1923, ordinary goods cost Trillions of Marks. From 1914 to 1923, Germany’s tax revenues paid for only 15.0 percent of its expenses; by October 1923, tax receipts covered only 0.8 percent of government expenditures. To the government and its supporters, its paper inflation was a consequence, not a cause; the real culprits in Germany’s monetary meltdown were the impossible reparation payments and other burdens imposed by the Treaty of Versailles. Eventually, currency speculators shared the blame, but the official press never placed responsibility for the inflation on the institution actually printing the money.
And in the 1990s Yugoslavia had 5 quadrillion percent inflation. The Communist Party running the country had been financing government projects with printing press money, a tradition it had inherited from the regime under Josip Broz Tito but which it carried on to a far greater degree. The government ran a network of stores that were supposed to sell goods below market prices, but the stores rarely had anything to sell. The government’s gasoline stations eventually closed, leaving people dealing with roadside vendors who sold gas at $8 a gallon from plastic cans sitting on the hoods of their cars. In October 1993—in an effort to halt soaring prices—the government issued a new currency unit, the dinar, worth one million of the old dinars.
February 2024 Inflation Up Slightly
According to the Bureau of Labor Statistics CPI report released on March 12th, Annual Inflation was up from 3.1% in January 3.2% in December. Monthly inflation was 0.54% in January and 0.62% in February. Seasonally adjusted monthly inflation was 0.3% for January, and 0.4% in February.
Inflation was slightly above the high end of our projected range. Indicating, that inflation pressure still exists.
Inflation, High Inflation, and Hyperinflation
The following article was written by Dr. Thorsten Polleit and was originally published in October 2022. Since then, inflation has come down significantly, but his analysis is still valid. Dr. Polleit is Chief Economist of Degussa Bank and an Honorary Professor at the University of Bayreuth. He also acts as an investment advisor. ~Tim McMahon, […]
Inflation Adjusted Gasoline Prices
Inflation Rate of Electricity Prices
Electricity Price Inflation Residential electricity prices in the U.S. have risen from an average of 7.83 cents per kilowatthour in 1990 to an average of 11.44 cents per kwh in 2010. This is a 46% increase in 20 years and sounds like a lot but as you can see from the chart below for many years[Read More…]
Inflation Adjusted NYSE Index
Source: inflationdata.com | NYSE Index Inflation Commentary To Print this Chart: When Printer dialog box appears be sure to switch to Landscape mode Note: Please feel free to link to this page but not to the image itself as the image may be renamed (or deleted) when it is updated but the page URL will[Read More…]
Inflation Adjusted Natural Gas Prices
By looking at the Inflation-adjusted natural gas prices we are better able to determine the trend and how prices actually compare to previous times. Speaking of natural gas prices… why are residential natural gas prices so cyclical? And why are they higher when the least amount is being used i.e. in the Summer?
Inflation Adjusted Housing Prices
Inflation Adjusted Real Estate Prices- Lets take a look at the idea that housing prices always go up. Of course, each neighborhood is different, so some neighborhoods might be going down while a few miles away housing prices are skyrocketing but by looking at the nationwide average we can get a better picture of the overall trend. The St. Louis Federal Reserve publishes the following chart that shows the S&P/Case Shiller National Home Price Index and by adjusting those prices for inflation we can get a better picture of how real estate prices really act. Is a home a good investment or not?
Inflation Adjusted Bonds
Inflation Indexed Bonds Performance- U.S. Treasury Inflation indexed bonds are supposed to protect you from the ravages of inflation while providing a safe and decent rate of return on your money. Obviously, since safety is generally inversely proportional to risk, if inflation indexed bonds are very safe you would expect the rate of return to be[Read More…]