As you know, inflation heated up in 2021, following years of pretty stable – and low – numbers. And now, early in 2022, we’re still seeing elevated prices. As a consumer, you may need to adjust your activities somewhat, but as an investor, how should you respond to inflation?
First, it helps to know the causes of this recent inflationary spike. Essentially, it’s a case of basic economics – strong demand for goods meeting inadequate supply, caused by material and labor shortages, along with shipping and delivery logjams. In other words, too many dollars chasing too few goods.
Once the supply chain issues begin to ease and consumer spending moves from goods to services as the COVID-19 pandemic wanes, it’s likely that inflation will moderate, but it may still stay above pre-pandemic levels throughout 2022.
