There is an increased amount of speculation about inflation, as geopolitical tensions continue to build and disrupt the production and supply of oil. The increase in rhetoric is focused around both short- and long-term inflation: if inflation is present, is it transitory or is it settling in for the long haul?
At times, it can be difficult to wrap one’s head around all of this inflation talk, especially when consumers are feeling the pain of higher prices at the gas pump and the grocery store. On a related note, have you noticed that cereal boxes have become smaller, or that bags of chips are now lighter? These are simply creative ways of passing higher prices to the consumer without causing sticker shock.
However you look at it, inflation as experienced and measured by the general consumer is at a high point. But is this a sign that persistent price inflation is just around the corner? Not necessarily, or at least not when measured through the gauges that the government uses to analyze inflation. This is why Federal Reserve Chairman Ben Bernanke remains very vocal in his view that inflation is not currently a problem and that the recent price increases in oil and commodity prices are likely to prove transitory.
Read the full commentary presented by Sean P. Simko, Managing Director of the SEI Fixed Income Portfolio Management team: