How worried should your clients be about inflation?
Consider this.
For years the core inflation rate has not varied while equity markets have rapidly increased but according to data in April 2021, economists were surprised at the spike in prices.
“The Consumer Price Index rose 4.2% from a year earlier in 2020. The increase in the annual headline CPI rate was the fastest since September 2008, while the monthly gain in core inflation was the largest since 1981”. 1.
Should your clients be worried about a repeat of the 1970s, when the rate of inflation climbed to 13.5% by 1980? (What economists now call the Great Inflation)
Maybe.
Could it be that this is just a temporary hiccup caused by the economy emerging from the pandemic-driven slowdown, then further complicated by supply chain issues?
Your clients may be concerned that their future spending power is at risk, but not everyone shares that concern.
Ahmed Farooq, CIMA®, CFP notes, “It should be acknowledged that this change in sentiment is good news in itself, reflecting that the darkest days of the pandemic are likely behind us now and the global economy is recovering.”
Sure, Inflation is something to keep an eye on, especially in a year when there has been such a fluctuation with so many of the usual variables.
More importantly, how well are you alleviating inflation concerns for your client?
Circle of Wealth® ‘s “Annual Inflation Tool” simplifies explaining the history of inflation to your client and the long-term effect of inflation on their standard of living.
Watch our Executive coach Jeremy Shipp discuss the current concerns of inflation.
1. https://www.cnbc.com/2021/05/12/consumer-price-index-april-2021.html