Thoughts About Inflation

Anyone who's bought anything recently knows... prices are going up.

I used to pay about $25 for a tank of gas for my Honda CR-V, now I pay about $35. My grocery bill is up maybe $10 more every week, and the quote I received from my remodel contractor was more than what it would've been about a year ago. Has anyone seen a pile of lumber laying around recently? Lumber's a hot commodity these days!

There's no doubt that prices are going up, and typically when that happens, we start to see more news stories and articles about inflation. Even Warren Buffet recently said at his 2021 Berkshire Hathaway Annual Meeting to Shareholders that we're seeing "very substantial inflation".

Inflation has recently begun to accelerate due to multiple factors. Increased demand and struggles to meet the supply needed due to COVID restrictions leaves supply chains dry, not to mention people want to do more projects, traveling and purchasing than last year. That's definitely the case for me specifically - last May I was casually looking for a home, and now this year I'm a first time home buyer looking to upgrade my scratched linoleum floors. Did I mention the price of lumber is up almost 250% since last year?

Although prices are rising, it's important to keep in mind the benefits of rising prices. This time last year, oil and gas companies couldn't unload their oil tanks for free even if they tried. When jet planes aren't flying and cars aren't driving, there's no oil consumption, and that doesn't mean good things for the economy, or the world as a whole. No doubt, our economy has rebounded since May 2020 - and price increases overall mean things are moving and grooving towards normalcy in our world.

Now, inflation will be monitored closely throughout the rest of this year and next. Federal Reserve Chair Jerome Powell recently suggested that inflation may move temporarily higher then settle back to around the central bank's 2% target. Interest rates remain low and will probably remain low until we see a full economy again when all states have removed COVID restrictions on employers. Time will tell, and the Fed will adjust.

As for my floors... linoleum doesn't look so bad right now, as long as rug companies don't incur a nylon shortage.