How to Profit From Inflation

NEWS ALERT February 10, 2022, 10:32 a.m. EST: The Consumer Price Index (CPI) rose 0.6% in January. In the last 12 months, the index has increased 7.5%, the largest year-over-year jump in prices since 1982.1

For consumers, inflation means higher prices on goods and services, and the risk of a loss of purchasing power if their income fails to keep up. Conversely, a decline in prices is known as deflation.

Persistent deflation can increase unemployment and undermine the financial system as well as the broader economy by making it more difficult to service debt. The U.S. Federal Reserve is targeting a 2% average inflation rate over time as most consistent with its dual mandate to promote price stability and maximum employment.23

Sharp deviations from a modest inflation rate in either direction present challenges for investors as well as consumers. That’s because they have the potential for significant economic disruption. They also have varying and often unpredictable effects on various asset classes.45


  • 1 Several asset classes perform well in inflationary environments.
  • 2 Tangible assets, like real estate and commodities, have historically been seen as inflation hedges.
  • 3 Some specialized securities can maintain a portfolio’s buying power including certain sector stocks, inflation-indexed bonds, and securitized debt.
  • 4 Inflation-sensitive investments are accessed in a variety of ways as both direct and indirect investments.