Navigating High Inflation

You don’t need to be a committed follower of economic developments, to see where inflation is at right now. 

Wherever you’re based, your weekly shop has most likely risen, and your salary isn’t stretching as far as it once did. 

Although global inflation is expected to fall this year from 8.8 percent to 6.6 percent, according to the IMF, the challenges it poses will remain a significant obstacle over the coming years. 

In this piece, we’ll take a closer look at the current economic environment and, by profiling our dedicated Inflation Opportunities webinar, explore how you can best navigate this scenario and seize the opportunities that it presents.  

How Have We Got Here?

Let’s begin by looking at some of the drivers of this record-breaking inflation. 

The Covid-19 pandemic is of course at the centre of the current economic environment we find ourselves in. 

On a very basic level, global governments were forced to invest more money at the same time as their economies reached near stand-still, with many forced to take on huge loans, lower interest rates and print more currency. The knock-on effect of this was that the value of each individual unit of currency was significantly reduced. 

Add to this the lack of economic growth and we have a situation where demand for goods and services far outweighs the available supply – driving up prices even further. 

In addition to this seismic event, the Russian invasion of Ukraine has triggered a global energy crisis – stalling optimists’ hope of a post-covid economic bounce. 

This has only led to further supply issues and price rises – as well as widespread political and economic instability. 

These events, as well as the wider knock-on effects they present (protectionist policies, higher import taxes, exchange rates, wage demands etc.) lead us to a situation where, for the past four years or so, inflation is as dangerous as ever. 

Four Key Drivers of Inflation: 

• Excessive money supply: Central banks printing too much money or lowering interest rates leads to inflation by increasing the amount of money in circulation.
• High demand for goods and services: Demand exceeding supply due to supply issues or changing preferences results in rising prices and inflation.
• Supply-side shocks: Sudden changes in the availability or cost of goods and services disrupts supply chains and increase prices, causing inflation.
• Cost-push inflation: Increased production costs, such as raw materials, energy (most relevant in this case), or labor, result in higher prices and create inflationary pressures.

High Inflation: Here to Stay?

The latest inflation figures for the US show that having peaked at 9% in June 2022, annual inflation for the 12 months ending February 2023 was closer to 6.04%. 

A positive sign of a downward trend? Yes, of course. But it may not be as straightforward as that. 

Predictions of a strong boost in growth from pent-up demand post-covid have been somewhat diluted. 

The war in Ukraine has of course introduced increased market instability and the risk of further geopolitical fragmentation. Equally, China’s emergence from the pandemic has been much slower than expected and remains a burden on growth and development. 

In short, any predictions about future global inflation rates can change almost overnight with such widespread uncertainty and instability. 

According to the latest IMF forecasts, global inflation is expected to fall from 8.8 percent in 2022 to 6.6 percent in 2023 and 4.3 percent in 2024. However, even this 2024 rate of 4.3 percent is still above pre-pandemic (2017–19) levels of about 3.5 percent.

That’s to say that at least in the near-future, high inflation looks like it’s set to stay and there are competing views on where the global economy is heading next. 

So, who can you trust? How can you best protect yourself from risk? And what are the opportunities this landscape presents? 

Finding Opportunities in Inflation

As you may have noticed, when it comes to economic predictions, there are lots of coulds, maybes, and potentiallys. And this is where the experts really distinguish themselves. 

Navigating this turbulent and fragile market requires in-depth knowledge, expertise, and insight. 

For those wishing to reduce the risks presented by this high-inflation environment and seize any opportunities that arise, our Inflation Opportunity webinar is a truly valuable source. 

Led by Kirk Chisholm, Wealth Manager and Principal at Innovative Advisory Group (IAG), and Rich Checkan, President of Asset Strategies International, the webinar provides everything you need to know about where we find ourselves today.  

Beginning with a more in-depth look at the roots of current inflation, Chisholm and Checkan then provide us with a breakdown of the response by markets. With an emphasis on the personal impact of large-scale measures, our speakers explore the Federal Reserve’s next steps and highlight strategies that can be taken to mitigate risks. To conclude the webinar, the role of gold is explored as a means to reduce risk against currency devaluation and achieve returns. 

For anyone looking to better understand our high-inflation environment, the 60-minute seminar provides a solid foundation of context and insight, while then providing expert advice on how you can make inflation work for you. 

Ready to learn more and get help navigating high inflation? Download the webinar below.

Webinar Recording: Inflation Opportunity – EA Store (escapeartist.store)

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