Inflation is hitting US

I’ve seen articles stating that the inflation in the US is rising and mostly they say that it’s normal. The market doesn’t think so and it’s tanking right now. (Anyone “hoarding” ETFs?)

I wonder if someone has run some numbers to see if the inflation is rising here as well.
Anyone ? I have my expenses all tracked in sheets, but it’s too hard to really be sure. I should look into the food section and try to find the right information instead of just checking the totals.

I bought zucchinis for 0.59 CHF/kg, I am not sure there is inflation here :slight_smile:

To be more serious, after a negative inflation of -0.7% in 2020, there will be a positive inflation in 2020. I would be surprise if it reaches 1%. Nothing to worry here.

About the market, everybody always has a different explaination about why it is going down. Some people say it is because of inflation, other say that’s because the hedge funds are shorting the market to scary GME shareholders so that they could cover their shorts…

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The Federal Statistical Office?
image
+0.3% YoY in April 2021
I don’t think the risk of an inflation spike in CH is as high as in the US

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It’s actually 0.8% in a month and 4.2% YoY: Consumer Price Index Summary

(Edit: just realized s-g was referencing Swiss inflation data and I’m talking about the USA)

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I still wonder if someone has real numbers.
I know for sure that my Health Insurance was lower last year. 100chf maybe.
Milch from 1.95 to 2.05 in two years, etc…

If you download the tables the Swiss CPI is pretty detailed:
image
I wouldn’t necessarily trust anecdotical evidence instead…

Milk is produced in Switzerland, which is the category of product that didn’t go down last year.

Health insurance doesn’t get more expensive because health is more expensive, it gets more expensive because the population is aging, meaning that each person need more treatments in a year in average.

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Polyethylene pipes prices have risen quite a bit, we’ve received notice that steel prices would be risen too. I’d say commodities are on the rise, which should affect construction prices.

My health insurance premiums are making big jumps every year despite the news repeatedly saying it’s moderate.

Nothing like the U.S. (we haven’t put free money in the pockets of everybody) but some kind of inflation is happening here too.

you can switch health insurance every year. so we did and save around 1k chf yearly.

There’s always the question about how much switzerland itself can influence its inflation.
But as far as it can: the SNB/Thomas Jordan really dislikes inflation, so I wouldn’t be too worried about “swiss-influenced” inflation becoming too high.
For an interesting, shortish, german interview about the SNB possibly even influencing a inflation rate too low:

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USD / EUR Inflation is good for Switzerland. As soon as we experience a stable inflation there, the SNB may allow the CHF to gain value over these currencies. That can relief the presure on the SNB a bit. But at the same time, what happened in the US this month is mainly a statistical anomaly but not yet a clear sign of Inflation. Other than a funny number that was meaningless, nothing has happened yet. I don‘t think that we will alreadyexperience the USD & EUR Inflation I am hoping for a long time…

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Quite the contrary in my opinion. I think by the time next months numbers come out the USA will be at 6% YoY.

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1 Liter? If so, where do you pay as much as 2.05 ?

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The reason why we see 4% YoY now is mainly due to April ‚20 beeing super low; not ‚21 super high. This is the anomaly.

If you truly think that the US would experience a stable 6% Inflation; not just one blip but truly a few months or even quarters at that scale. This implies 20-30% loss on Bonds and Real Estate and 50%+ Loss on Shares. If so, you should NOW move into Cash in a hard currency (aka CHF, SGD, AUD, NZD, JPY) and wait.

As a ketchup inflation builds up, Cash will imitially lose its value slower than any assets with a duration (aka Bonds, Real Estate, Stocks). So wait in cash until we found a new base aka a stable inflation level; and post this immediately switch over into Assets with Duration, preferrably shares as they can better deal with the inflation over the long term.

Mr Market is always right. So the early signals to watch out for are massive flows out of Assets into Cash. If this happens, then we can become super worried. Until I see this; I hold to my believe that we are (unfortunately) still far away from material and lasting inflation levels…

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To avoid the April 2020 anomaly, you can take the average over two years: square_root((index in April 2021) / (index in April 2019)) - 1. You get an annual 2.23% price inflation over both years - pretty standard in the US.

2-year, annualized Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2000 2.20% 2.41% 2.74% 2.67% 2.64% 2.84% 2.90% 2.84% 3.04% 3.00% 3.03% 3.04% 2.78%
2001 3.23% 3.38% 3.34% 3.17% 3.40% 3.49% 3.19% 3.06% 3.05% 2.79% 2.67% 2.47% 3.10%
2002 2.43% 2.33% 2.20% 2.45% 2.39% 2.15% 2.09% 2.26% 2.08% 2.08% 2.05% 1.96% 2.21%
2003 1.87% 2.06% 2.24% 1.93% 1.62% 1.59% 1.79% 1.98% 1.92% 2.03% 1.98% 2.13% 1.93%
2004 2.26% 2.33% 2.38% 2.25% 2.55% 2.69% 2.55% 2.41% 2.43% 2.61% 2.64% 2.57% 2.47%
2005 2.45% 2.35% 2.44% 2.90% 2.93% 2.90% 3.08% 3.15% 3.61% 3.77% 3.49% 3.34% 3.02%
2006 3.48% 3.30% 3.26% 3.53% 3.48% 3.42% 3.66% 3.73% 3.37% 2.82% 2.71% 2.98% 3.31%
2007 3.03% 3.00% 3.07% 3.06% 3.43% 3.50% 3.25% 2.89% 2.41% 2.41% 3.13% 3.31% 3.04%
2008 3.17% 3.22% 3.38% 3.25% 3.43% 3.85% 3.97% 3.66% 3.84% 3.60% 2.68% 2.07% 3.34%
2009 2.13% 2.11% 1.78% 1.57% 1.41% 1.75% 1.68% 1.89% 1.78% 1.72% 1.45% 1.40% 1.72%
2010 1.32% 1.19% 0.96% 0.74% 0.36% -0.19% -0.44% -0.18% -0.08% 0.49% 1.50% 2.11% 0.64%
2011 2.13% 2.13% 2.50% 2.70% 2.79% 2.31% 2.42% 2.45% 2.50% 2.34% 2.26% 2.23% 2.40%
2012 2.28% 2.49% 2.67% 2.73% 2.63% 2.61% 2.51% 2.73% 2.93% 2.84% 2.57% 2.35% 2.61%
2013 2.26% 2.42% 2.06% 1.68% 1.53% 1.70% 1.68% 1.61% 1.59% 1.56% 1.50% 1.60% 1.76%
2014 1.59% 1.55% 1.49% 1.51% 1.74% 1.91% 1.98% 1.61% 1.42% 1.31% 1.28% 1.13% 1.54%
2015 0.74% 0.55% 0.72% 0.87% 1.04% 1.09% 1.08% 0.94% 0.81% 0.91% 0.91% 0.76% 0.87%
2016 0.64% 0.49% 0.39% 0.46% 0.49% 0.56% 0.50% 0.63% 0.71% 0.90% 1.10% 1.40% 0.69%
2017 1.94% 1.87% 1.61% 1.66% 1.45% 1.31% 1.28% 1.50% 1.85% 1.84% 1.95% 2.09% 1.69%
2018 2.29% 2.47% 2.37% 2.33% 2.34% 2.25% 2.33% 2.32% 2.25% 2.28% 2.19% 2.01% 2.29%
2019 1.81% 1.87% 2.11% 2.23% 2.29% 2.26% 2.38% 2.22% 1.99% 2.14% 2.11% 2.10% 2.13%
2020 2.02% 1.93% 1.70% 1.16% 0.95% 1.15% 1.40% 1.53% 1.54% 1.47% 1.61% 1.82% 1.52%
2021 1.94% 2.01% 2.08% 2.23% 1.64%

2Liters. I mostly buy the big ones.

So they say, I don’t think it’s the whole story. We had YoY inflation in January, February and March as well and not just April. They handed out money and produced less goods.

Yes, I truly think that and I’m positioned accordingly. Not cash though.

Granted, this is market timing …

Would You mind to share how you invest for such scenario? Gold? Inflation Protected Bonds?

Have a look at VTIP, it’s US treasury bonds “protected” for inflation and has done its job quite well since end of last year. I nearly regret having sold them last year :wink:

Yeah mostly precious metals right now because I feel like it has a great risk-reward ratio right now. A little bit of mining stocks, but only a little because that seemingly behaves similar to a leveraged precious metals position and they’re already up a lot.

If you want to play this and have less conviction in the timing and think it could be 3 years to a crash, you could get some emerging market equities too but I find it tough to do stock-picking in those areas. The Fundsmith Emerging* Equities Trust got mentioned in this forum, EP Emerging MarketsSmall Companies Fund (EPASX) is another option.

Not financial advice!

Edit: *or not Emerging, see comment from Barto below.

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