Inflation Concerns in the Future

The Consumer Price Index is a very closely watched report as it is one of the leading indicators of inflation. In January the CPI rose by .2%, less than the .3% expected. This left the year over year CPI at 2.6%, below expectations of 2.8%. The more closely watched Core CPI fell by .1%, below expectations of a .1% rise. The last time the Core CPI showed a negative monthly reading was 28 years ago.

While inflation is virtually non-existent right now, things can change down the road. There is much talk about inflation amongst Fed officials, economists and the media. There are many different opinions surrounding the topic. Whenever there is an abundance of money being pushed into the system, one must worry about inflation resulting.

Fed President Thomas Hoenig has recently expressed much concern over future inflation. He is so passionate about it, he has in his office a framed picture of a 500,000 German mark bill – which would have purchased a home in 1921, but due to sudden inflation, wouldn’t purchase a loaf of bread just two years later.

Real estate is an investment that has been utilized as a hedge against inflation. With future inflation concerns, low home prices, homebuyer tax credits, and historically low interest rates, now represents one of the best opportunities in history to purchase real estate!

~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com