Here's What Investors Need to Know About Inflation, and 2 Stocks to Buy Now
Inflation is the general rise in the price of goods and services, and it's measured by the Consumer Price Index (CPI), which is updated by the Bureau of Labor Statistics each month.
Annualized CPI spent a decade hovering around the U.S. Federal Reserve's 2% target, before surging to a 40-year high of 9.1% in mid-2022. Causes include pandemic-related government stimulus and record-low interest rates. Now, some inflation is good because when consumers expect prices to gradually rise, it entices them to spend money now. Plus, it keeps the workforce's wages growing.
But when prices rise aggressively, it can usher in an economic catastrophe in which consumers simply can't afford everyday goods and services. That's why the Federal Reserve embarked on the most aggressive campaign to hike interest rates in its history over the last 12 months. The good news is it's working: Annualized CPI has declined for 10 straight months since the high in June last year.
Source Fool.com
