The Federal Reserve may say otherwise, but in our bones, we know inflation is here to stay. Restaurants are struggling to hire waiters who are holding out for higher pay; grabbing a beer is starting to pinch. In the red-hot U.S. housing market, even the cheapest homes are getting pricier. Last month, producers’ prices in China jumped by 6.8%, so it’s just a matter of time before the world’s largest exporter brings broader inflation to the American shore.
Three percent core inflation is not necessarily bad news for the middle-class wallet. Annual salary raises may be higher and — other than cash and gold — asset value often rises with the cost of living. But a person has to choose her investments more carefully, especially if she wants to do ambitious things, like send her children to elite private universities.
