The latest Consumer Price Index report showed that inflation rose to a three-year high in May. Core inflation, which strips out food and energy, was more contained, but still running above the Federal Reserve’s preferred comfort zone.
A surge in gasoline, diesel, jet fuel, and other energy costs can hit consumers quickly, even if the broader inflation picture is less alarming. When energy prices rise sharply, the effect can ripple through the economy.
For savers, the problem is simple. Inflation erodes purchasing power. That does not mean investors should panic. But it does mean they should think carefully about where different types of money belong.
This post originally appeared at Investing Daily.