So, What is Inflation and What Can Cause It?

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Inflation has been a hot topic recently. In May, the Bloomberg Commodity Spot Index reached the highest level since 2011. So, what is inflation and what can cause it? Inflation is defined as a measure of the rate of rising prices of goods and services in an economy. Inflation can occur when prices rise due to increases in production costs, such as raw materials. If you know anyone that is building a home right now, they can tell you the cost of everything has risen quite a bit recently. Also, a rise in demand for products and services can cause inflation as consumers are coming out of quarantine and are willing to spend.

The big questions you may have are:

● How much will inflation rise?
● How will it affect my portfolio?
● What should I do? Our thoughts? Don’t let fear guide your investment advice.

Inflation isn’t new and emotional investing is rarely smart investing. While inflation can be a concern, your financial advisor should have this in mind when designing a portfolio that is just for and your particular financial goals. Still have questions? Contact us today to discuss.

The Bloomberg Commodity Indices (BCOM) are a family of financial benchmarks designed to provide liquid and diversified exposure to physical commodities via futures contracts. The principal potential benefits of including commodities in a diversified financial portfolio include positive returns over time and low correlation with equities and fixed income.

BCOM provides broad-based exposure to commodities, and no single commodity or commodity sector dominates the Index. Rather than being driven by micro-economic events affecting one commodity market or sector, the diversified commodity exposure of BCOM potentially reduces volatility in comparison with non-diversified commodity investments.

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