CNBC: “Inflation is continuing to rise—here’s how it could affect your money”
CNBC, June 16, 2021 — In today’s CNBC’s Make It article, reporter Alicia Adamczyk writes:
“Last month, the U.S. consumer price index, a survey of a variety of goods, rose 5% compared with a year ago. The gain was a bit more than anticipated and the largest increase since the summer of 2008, according to the Labor Department. That has Wall Street buzzing about what inflation means for markets and the economy. But what does it mean for, you know, normal people? Mostly, higher prices. But first, it’s important to understand what inflation is and where it comes from. Essentially, inflation is the rise in prices you’ll pay for goods and services. You’ll have to spend more to get the same things. Some level of inflation — around 2% — is normal.”
Alicia turned to Marguerita Cheng, CFP® Pro, CEO of Blue Ocean Global Wealth Management, for insight into consumer goods and savings accounts.
Alicia explains: Inflation erodes the average person’s purchasing power. Everyone’s true inflation rate is different because we all buy different products and services. You can expect to pay more for used cars and car rentals, furniture, airline fares, hotels, and everyday essentials like groceries and gas. Used car prices rose 29.7% compared with last year, for example, while clothing costs 5.6% more. Housing and remodeling supplies are also sky-high.
Rita insists: “That’s no reason not to spend money, especially after the past 15 months. You just want to be mindful of the increased prices. With interest rates on savings accounts already hovering just above 0% nationwide, inflation can make your cash worth even less. But that’s no reason to move it around, especially your emergency fund. Savings is not designed to make you rich. It’s meant to provide a financial cushion, should you need it. That said, if you have more idle cash than you need in an emergency fund (experts recommend having three to six months’ worth of expenses stashed away, sometimes more), then you might consider investing some of it.”