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David P. McCabe,
WMCP®, ChFC®, CLU®
Financial Planner
Nathaniel D. High, RICP®
Financial Planner
Nicholas J. Over, CFP®
Financial Planner
Sara E. Martin
Client Relations Manager
Jennifer A. McCabe
Client Relations Specialist
jennifer.mccabe@prudential.com
Centuria Financial Group
2333 Baltimore Blvd Suite B
Finksburg, MD 21048
Phone: 443-952-7232
May/June 2023
All About Inflation
You don’t have to see government statistics to know that the cost of just about everything is going up. All it takes is a weekly trip to the supermarket or your favorite department store to know that, after several years of low inflation, the purchasing power of your money is declining.
The CPI
The Bureau of Labor Statistics (BLS) measures inflation using the Consumer Price Index (CPI). The CPI tracks changes over time in the average price of a “basket” of goods and services in eight major categories: food, housing, apparel, transportation, health care, education, communication, recreation and other goods/ services.How It Happens
Inflation occurs when prices go up and the dollar’s purchasing power goes down. An increase in demand or a decrease in supply fuels inflation. Manufacturing and supply chain issues over the past couple of years have contributed to shortages of certain materials, resulting in higher production costs. As production costs rise, so do prices.Inflation’s Impact
Mild inflation can be good for the economy, since consumers tend to spend money, rather than put off purchases for later. But once inflation escalates and takes hold, prices rise and consumers stop spending.
The Federal Reserve raises interest rates to help control inflation. As rates increase, people who have variable interest rate debt, such as credit card debt, adjustable-rate mortgages, and home equity loans or lines of credit, will pay more.
Inflation and Investments
Some assets, including Treasury Inflation Protected Securities (TIPS), floating-rate bonds, real estate, and certain stocks and commodities, may provide a hedge against inflation. Stock prices often rise as companies adjust to meet higher supply chain and production costs. However, stocks may experience increased volatility and price fluctuation.Inflation and Retirement Savings
Current retirees are likely to see the value of their pensions and savings decline as inflation increases. They’ll spend more of their income to pay for the same lifestyle they’re used to. People who are still working and saving for retirement will need to set aside more money in their retirement accounts, as the amount they’ll need to save for a comfortable lifestyle keeps increasing. Your financial professional can help you determine a new target amount.1056764-00002-00
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Centuria Financial Group is not affiliated with Prudential Financial. Centuria Financial Group sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. Centuria Financial Group is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. Centuria Financial Group and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Sara E. Martin and Jennifer McCabe are employed by David McCabe and not The Prudential Insurance Company of America or its subsidiaries.
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