The U.S. dollar has been persistently strong across the last several years through thick and thin, while inflation has remained quite modest. As measured by the Consumer Price Index or CPI, inflation hasn’t topped 3% since November 2011 and hasn’t been above a 4% annual rate since the first few weeks of 2008.
But with quantitative easing in force, persistently high unemployment and no sign of “tapering” to the central bank policy anytime soon, some are wondering if this long run of modest prices is about to end.
In this environment there’s a chance that the dollar could slip lower or at least stay at relatively depressed levels — sparking inflationary pressures that affect commodity prices in materials, energy and food.
Even without breakneck demand propping up prices thanks to economic growth, we could see modest inflation in 2014 and beyond in this environment. If that happens, consider investing in these stocks.