The Capital Group Inc. Singapore- Three Facts Investors Need to Know
Inflation
Is Back. Three Facts Investors Need to Know
Its official: inflation is back in the US. The consumer price index hit 2.1 % at the end of 2016— the highest level since June 2014. For investors, an upturn in inflation can be a big deal. With that in mind, here are three facts investors need to know.
1. The Scene Is Set for Higher Inflation.
The recent inflation figure may have grabbed the headlines, but evidence suggesting higher inflation is coming has been around for a while. Longer term U. S. Treasury yields are often a good barometer, and they first started to move up in mid-2016.
Factors lifting inflation include prospects for greater government spending under the new administration, higher housing prices and increased fuel costs. Oil prices have recently been above US $ 50 a barrel, about double the level of around a year ago when they hit a 13-year low of US $ 26.
Wages are another important factor to keep an eye on. Given that the unemployment rate( 4.7 % in December 2016) is close to the Federal Reserve’ s estimate of full employment, pay increases could become a key source of inflationary pressure.