Inflation hitting a 25yr old record | Predictions for the future

[Ultegra134]

The increasing inflation is currently soaring across the globe, leading to excessive price increases in most goods, in fuel and energy. To make matters worse fuel and energy costs are not included in inflation's index, thus, a 5-6 or 7% increase, is actually a lot worse than anticipated.

In particular, Greece is now facing a 6.2% rise in inflation, compared to January 2021, the largest ever recorded since 1997, compared to 5.1% in December. Increases are now spreading across the spectrum of the economy and not just energy, as it was a while ago, thus reducing disposable income and reducing inflation not to an economic issue but to a wider social issue.

According to ELSTAT data, the goods with the largest increase compared to January 2021 are:

Natural gas with an increase of 154.8%
Heating Oil with an increase of 36%,
Electricity with 56.7%,
Fuels with 21.6%,
Lamb and goat with 17.6%,
Olive oil with 15.4% and
potatoes with 12.3%.
Fresh vegetables 14.4%
 
The situation is about to get worse, with depressing predictions of it surpassing 7%-8% in the upcoming March. How are we dealing with such a situation? It feels like a battle against an invisible enemy. Our available income is shrinking, what is the best way to tackle inflation? The most common answer I've seen is to invest, rather than save, but how exactly do you invest? Since when is buying cryptocurrencies, such as Bitcoin, tackling inflation, since it can also face periods that it's losing value.

Is it going to get any better, and how soon is that going to be, if prices ever recover. Personally, I highly doubt it that the situation is going to get any better within 2022.

[Sterbens]

The situation is about to get worse, with depressing predictions of it surpassing 7%-8% in the upcoming March. How are we dealing with such a situation? It feels like a battle against an invisible enemy. Our available income is shrinking, what is the best way to tackle inflation? The most common answer I've seen is to invest, rather than save, but how exactly do you invest? Since when is buying cryptocurrencies, such as Bitcoin, tackling inflation, since it can also face periods that it's losing value.

Is it going to get any better, and how soon is that going to be, if prices ever recover. Personally, I highly doubt it that the situation is going to get any better within 2022.

No one knows for sure whether this year will be the start of a year of even bigger inflation in the future or not. Due to the fact that no one is really 100% safe from inflation.

Period of loss of value? how much does it cost to lose value in Bitcoin instead of paper money? even that would be quite difficult to recover by the banknotes themselves. about where are we going to save the economy if everything really experiences inflation evenly?
Pay attention to the economic situation where you live first, and don't rely too much on the inflation of a country that is not where you live. Methods of anticipating or minimizing it will vary.

[stompix]

The situation is about to get worse, with depressing predictions of it surpassing 7%-8% in the upcoming March. How are we dealing with such a situation? It feels like a battle against an invisible enemy.

Not totally invisible, from the Acropolis just look a bit to the left from the direction of Istambul with a really good pair of binoculars about, 3000km away! 
Just like in my case here and almost everywhere in Europe inflation is triggered by energy prices, look at Japan, finally getting 1%, Australia is at 3% just like Vietnam. If you haven't made the mistake of printing money and you don't really on some war mongrel for fuel this would have passed easy.

That said, things can't get on like this if they are only caused by energy, there is a barrier to how high prices can go before finally some other means of production strat becoming profitable, just like shale drilling did, and how Canada is ramping up production as never before.
Winter is almost done, one last push and we're out of this mess for a while, it will help a lot especially with gas and electricity prices, not that they are going to go back to the past levels but growth will slow down to maybe hopefully a near-complete standstill.

Pay attention to the economic situation where you live first, and don't rely too much on the inflation of a country that is not where you live. Methods of anticipating or minimizing it will vary.

That's exactly what he is doing, d'oh!!!! He is talking about his own country's situation.

[Ultegra134]

The situation is about to get worse, with depressing predictions of it surpassing 7%-8% in the upcoming March. How are we dealing with such a situation? It feels like a battle against an invisible enemy.

Not totally invisible, from the Acropolis just look a bit to the left from the direction of Istambul with a really good pair of binoculars about, 3000km away! 
Just like in my case here and almost everywhere in Europe inflation is triggered by energy prices, look at Japan, finally getting 1%, Australia is at 3% just like Vietnam. If you haven't made the mistake of printing money and you don't really on some war mongrel for fuel this would have passed easy.

That said, things can't get on like this if they are only caused by energy, there is a barrier to how high prices can go before finally some other means of production strat becoming profitable, just like shale drilling did, and how Canada is ramping up production as never before.
Winter is almost done, one last push and we're out of this mess for a while, it will help a lot especially with gas and electricity prices, not that they are going to go back to the past levels but growth will slow down to maybe hopefully a near-complete standstill.

It's a vicious cycle, the increasing cost of fuel has led to the increase of transportation costs, which obviously leads to higher prices in goods, in order to compensate for the difference. Same thing goes for electricity. However, you're mentioning that winter is about to finish, how is that going to make a difference in energy and fuel?

It's definitely not going to return to quarantine levels, that's for sure, but with the upcoming tourist season only a few months from now, I find it hard to believe that anything is going to change for the better, anytime soon.

[stompix]

It's a vicious cycle, the increasing cost of fuel has led to the increase of transportation costs, which obviously leads to higher prices in goods, in order to compensate for the difference. Same thing goes for electricity. However, you're mentioning that winter is about to finish, how is that going to make a difference in energy and fuel?

Less energy is needed to heat houses, be it gas or electricity, less energy to heat schools, administration buildings even malls and shops, less demand means lowering the prices to acceptable levels. Europe imports now energy in all forms because during winter it can't function on its own production, once the days become longer, those damn solar panels that are useless in winter finally produce something, you don't need to burn that much stuff for electricity and so on and on. Once the entire oil industry is back on track it's simply impossible for the prices to be that high, all this happened because the world nearly stopped drilling and just barely bounced back although transportation and agriculture are back to pre-pandemic level consumption.

It's definitely not going to return to quarantine levels, that's for sure, but with the upcoming tourist season only a few months from now, I find it hard to believe that anything is going to change for the better, anytime soon.

If inflation will bit too hard in the pockets then you will have fewer people traveling and thus less fuel spent.  
There is always a balance point, sooner or later we will come to it, things can't go up or down in price indefinitely compared to purchasing power, right now it's a matter of how deep those bites marks on our asses will be.

[coolcoinz]

You're talking about the energy, but many countries face skyrocketing inflation because of the pandemic and what their governments did at that time. In 2020 they decided that the best way to fight the virus will be to lock people in their homes, which lead to businesses going bankrupt, especially those that operated on tight margins like cinemas. The main problem was that when they lifted the bans they still kept many strict rules like the number of people allowed in store at one time, you couldn't eat a meal at a restaurant and had to order, you couldn't throw a party, which killed the whole wedding industry... What did our "smart" rulers do? They printed some money and started giving it to businesses that had to be locked down. It sure saved them from going bankrupt for a while, but also made the inflation skyrocket because suddenly everybody had more money. Money that is worth less.

By printing the government imposes a tax on everyone. That's what they do when they have no money. They tax everybody and everything and the worst part about it is that many people don't even feel it. They don't get that additional 1% of inflation means 1% less of their savings every year. Tell them they now have to pay 21% income tax instead of 20 and you'll have protests, but not many people protest against money printing. Media tell them that inflation is a thing that happens, like it was some higher power dropping it on their heads.

[sunsilk]

It's not going to get better or get back to what we've used to see. Once the price especially for fuel and other energy commodities rises, it's hard to pull it back. That's the reality that has been happening all of these years.

Good for those countries that have been researching and making renewable energy as a source as they might feel a little or not feel that much with the global economy's inflation and issue that's being tackled from country to country.

The solutions are what you've said, anything that you can hedge against the inflation like bitcoin, real estate, gold, income-generating asset. You invest on them. Don't forget that when crisis happens and you're affected by a possible war, cash is still needed.

[RickDeckard]

Is it going to get any better, and how soon is that going to be, if prices ever recover. Personally, I highly doubt it that the situation is going to get any better within 2022.

Most probably Powell will eventually be forced to increase interest rates (some analysts say that this may happen in March[1][3][4]) - this is, most of the time, one of "tools" that governments employ to tackle inflation[2]. Regarding this FOMC meeting (that is expected to happen in about 27 days) where Powell may or may not announce this raise, I have this[5] webpage bookmarked that always brings me some interesting perspective regarding how the overall market expects this meeting to happen:



As of writing, the market "feels" that in the next FOMC meeting there is 44.3 % probability of increasing the interest rates in 50-75 bps (0,5 - 0,75 %) - what's more interesting is that the probability of increasing in 25-50 bps (0,25 %-0,5 %) is 55,7 % which means that the market is already expecting that at least there will be an increase of 0,25 %! One never knows who any of this increase will impact each commodity (and inflation itself), but I'm guessing that 2022 is going to be a year where we'll face some financial challenges and market behaviors that haven't existed in a while...
[1]https://www.marketwatch.com/story/fed-expects-it-will-soon-be-appropriate-to-raise-interest-rates-11643223873
[2]https://www.investopedia.com/ask/answers/12/inflation-interest-rate-relationship.asp
[3]https://www.reuters.com/business/finance/inflation-fighting-fed-likely-flag-march-interest-rate-hike-2022-01-26/
[4]https://finance.yahoo.com/news/powell-march-rate-hike-likely-as-fed-looks-to-be-nimble-on-inflation-213943644.html
[5]https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

[Darker45]

I'm not anymore expecting that things are going to get better as far as the rising prices and decreasing purchasing power of fiat is concerned, especially not in my country where the leaders, regulators, and policy-makers are not at all affected. However, the ordinary person in my beautiful yet forsaken country has felt the pain in the rising prices of fish, vegetables, meat and meat products, transportation, and probably everything else.

I've long developed the mentality of not expecting, even hoping, much from the government and how it handles the economy-- the real one and not just the one presented through statistics and numbers. Perhaps we need to strive on our own, look for other means to augment our income. We need to somehow reduce our reliance to the government which is not really looking after our welfare.

Anyway, with Bitcoin, saving is already investing. It is pointless to save in fiat.

[bittraffic]

My country does nothing, they are just hoping people will get used to the prices. If I have money, I'll just invest in real properties where I can make money through rentals or buy a farm.

My approach would be to become a Minimalist. This will reduce a lot of extra expenses for me, there is just less hope for getting back to normal anymore. The experience is just visible already and the more we all gonna try to make more money because the prices of daily needs keep rising. I even use my Japanese bike already to save gas, maybe having a solar panel as well might save me electricity costs.

[Moneyprism]

we can't do much about global inflation which has been getting higher in recent times. moreover, the Russia-Ukraine crisis is getting hotter which is disrupting the global supply chain

.... in my country, fortunately, we have sufficient resources to meet domestic needs and do not need to import too much from other countries. so that the inflation rate here is quite low and under control.

i believe that in the future global inflation will not get better and we hope that global market conditions will not be like in 2008.

[Ultegra134]

It's a vicious cycle, the increasing cost of fuel has led to the increase of transportation costs, which obviously leads to higher prices in goods, in order to compensate for the difference. Same thing goes for electricity. However, you're mentioning that winter is about to finish, how is that going to make a difference in energy and fuel?

Less energy is needed to heat houses, be it gas or electricity, less energy to heat schools, administration buildings even malls and shops, less demand means lowering the prices to acceptable levels. Europe imports now energy in all forms because during winter it can't function on its own production, once the days become longer, those damn solar panels that are useless in winter finally produce something, you don't need to burn that much stuff for electricity and so on and on. Once the entire oil industry is back on track it's simply impossible for the prices to be that high, all this happened because the world nearly stopped drilling and just barely bounced back although transportation and agriculture are back to pre-pandemic level consumption.

While I see where you're coming from, doesn't the same thing occur in the summer? A/C units use a ton of energy as well, however, I'm not sure on how comparable these two are. Particularly here, there's a widespread issue during the summer, due to the vast number of hotels opening up, the energy supply cannot keep up with the demand. However, this is probably an isolated incident and definitely doesn't occur throughout the globe.

It's not going to get better or get back to what we've used to see. Once the price especially for fuel and other energy commodities rises, it's hard to pull it back. That's the reality that has been happening all of these years.

Good for those countries that have been researching and making renewable energy as a source as they might feel a little or not feel that much with the global economy's inflation and issue that's being tackled from country to country.

The solutions are what you've said, anything that you can hedge against the inflation like bitcoin, real estate, gold, income-generating asset. You invest on them. Don't forget that when crisis happens and you're affected by a possible war, cash is still needed.

That's what concerning me, fuel and energy prices hardly ever decrease, especially after reaching such prices. Eventually, they will drop, but they certainly won't return where they used to be.

[sunsilk]

It's not going to get better or get back to what we've used to see. Once the price especially for fuel and other energy commodities rises, it's hard to pull it back. That's the reality that has been happening all of these years.

Good for those countries that have been researching and making renewable energy as a source as they might feel a little or not feel that much with the global economy's inflation and issue that's being tackled from country to country.

The solutions are what you've said, anything that you can hedge against the inflation like bitcoin, real estate, gold, income-generating asset. You invest on them. Don't forget that when crisis happens and you're affected by a possible war, cash is still needed.

That's what concerning me, fuel and energy prices hardly ever decrease, especially after reaching such prices. Eventually, they will drop, but they certainly won't return where they used to be.

That what's been happening all over the years.

They keep on hiking in prices but they barely decrease in price. Well, I should acknowledge that last year there were a series of decrease on its price and as well as the start of lock downs. I've really seen the price of fuel dropped.

As far as what I've heard, this is going to continue up to March. I'm not sure if that's accurate but it's just an overheard and hopefully we start to see the drop of it so everything will drop in price as well.

[HodlNerd]

When it comes to fuel - I don't see how we ever get lower prices with current ESG regulations.

The only reason we saw them come down during the past decade was due to all of the domestic natural gas production.

Unless the U.S. energy policies change, I don't see anything but more expensive energy in the future.

Inflation for other goods, non-commodities, *should* see deflationary effects from technology.. right?  RIGHT?   

I'm pretty scared of inflation and not sure what to expect this next decade.

[Gyfts]

Also, produce price index for the U.S. reaching new records.

https://www.cnbc.com/2022/02/15/producer-price-index-january-2022-.html

Energy prices can fluctuate so some measures might exclude energy indicators, but even setting that aside, everyone is paying more for goods than they were pre-COVID. The supply chain issues only explain part of the issue, I've been paying attention to the PPI because you can make some broader conclusions about the direction of inflation -- the money supply works too.

https://fred.stlouisfed.org/series/M1SL

https://tradingeconomics.com/euro-area/money-supply-m1

The justification for endless printing due to COVID was that it was necessary. I don't believe their lies.

[stompix]

~

While I see where you're coming from, doesn't the same thing occur in the summer? A/C units use a ton of energy as well, however, I'm not sure on how comparable these two are. Particularly here, there's a widespread issue during the summer, due to the vast number of hotels opening up, the energy supply cannot keep up with the demand. However, this is probably an isolated incident and definitely doesn't occur throughout the globe.

That's why I was quoting Germany and its stupid solar program as an example.

When you need heat in the winter you need it during the night, when there is no sun.
When you need cooling during the summer you need it at peak sun hours, when there is also peak solar energy production.
Basically, when it comes to heating during cold winter Europe has only one chance we ditch coal, nuclear,  but during summer days we, fortunately, have another option.

My country does nothing, they are just hoping people will get used to the prices. If I have money, I'll just invest in real properties where I can make money through rentals or buy a farm.

And with higher inflation and lower purchasing power who is going to pay rent on extra properties for rental?
Remember what the last crisis did to the housing and rental markets?

.... in my country, fortunately, we have sufficient resources to meet domestic needs and do not need to import too much from other countries. so that the inflation rate here is quite low and under control.

Unfortunately, if prices will go out of control being a self-sufficient country will not help.
It's a matter of global markets if somebody realizes that instead of selling you bananas for 1$ per kilo they could ship it for 2$ to Germany and sell it at 5$ they will stop selling it internally and export them. The same is for oil, food, and even labor.
One major example is the pork sector, and the global influence China has to price, when things go wrong there and they start buying prices go up everywhere, I can tell you directly from the source a real pain in the ass as we didn't have enough without that.

[Haunebu]

The situation won't get better anytime soon in my opinion primarily thanks to factors like the pandemic, corruption etc and this has been the case for a long time now. I would be surprised if inflation actually goes down drastically.

The ones who adapt successfully to these rising prices will continue to survive while the rest will perish since it's survival of the fittest in this world.

[adaseb]

Yeah for many people in the mining field, depending on where you live. Profits can be horrible since electricity rates have gone up so much in the past year. I am paying record high electrical rates right now. We got LED everywhere and rarely use any high drain devices besides mining rigs.

They say its due to the shortage of energy and price of oil going up so many are using electricity, and when electricity goes up, people start using diesel to generate electricity and its an never ending cycle.

Hence this is why there is going to be lots of fed rate increases this year. Inflation is getting out of hand.

[avikz]

The situation won't get better anytime soon in my opinion primarily thanks to factors like the pandemic, corruption etc and this has been the case for a long time now. I would be surprised if inflation actually goes down drastically.

The ones who adapt successfully to these rising prices will continue to survive while the rest will perish since it's survival of the fittest in this world.

Inflation doesn't go down drastically. It always happens slowly and steadily if corrective measures are taken by the government. The only way to deal with inflation is to reduce the demand. To reduce the demand, tou have to suck out the excess money from the hands of the common people to government coffers. Interest rate increases and higher taxes are the most effective ways to do that.

For a common people to survive during high inflation, he has to invest in an inflation adjusted instruments like real estate or Gold or cryptos. So when the purchasing power of a currency goes down, the prices of these assets goes up to fill in the hollow.

[Ultegra134]

~

While I see where you're coming from, doesn't the same thing occur in the summer? A/C units use a ton of energy as well, however, I'm not sure on how comparable these two are. Particularly here, there's a widespread issue during the summer, due to the vast number of hotels opening up, the energy supply cannot keep up with the demand. However, this is probably an isolated incident and definitely doesn't occur throughout the globe.

That's why I was quoting Germany and its stupid solar program as an example.

When you need heat in the winter you need it during the night, when there is no sun.
When you need cooling during the summer you need it at peak sun hours, when there is also peak solar energy production.
Basically, when it comes to heating during cold winter Europe has only one chance we ditch coal, nuclear,  but during summer days we, fortunately, have another option.

Valid points and great explanation throughout your posts. I guess only time will tell, but from my point of view, it's not looking that it's going to get much better within 2022.

The situation won't get better anytime soon in my opinion primarily thanks to factors like the pandemic, corruption etc and this has been the case for a long time now. I would be surprised if inflation actually goes down drastically.

The ones who adapt successfully to these rising prices will continue to survive while the rest will perish since it's survival of the fittest in this world.

Inflation doesn't go down drastically. It always happens slowly and steadily if corrective measures are taken by the government. The only way to deal with inflation is to reduce the demand. To reduce the demand, tou have to suck out the excess money from the hands of the common people to government coffers. Interest rate increases and higher taxes are the most effective ways to do that.

For a common people to survive during high inflation, he has to invest in an inflation adjusted instruments like real estate or Gold or cryptos. So when the purchasing power of a currency goes down, the prices of these assets goes up to fill in the hollow.

How exactly does an average citizen, with an average or slightly above average, invest in gold or real estate? I mentioned in the starting post, that the majority of people who claim that inflation is battled by investing have no valid points about investments. Don't get me wrong, I'm not implying that I am, nor am I trying to insult you, but everyone says "invest" without being specific on what and how to do so.