Consumers will have to dig deeper into their pockets next year to pay for costlier healthcare, more expensive grocery bills and higher taxes, an extra drag on the country’s already slow-moving economy.
Rises in the prices of corn and soybeans and other field crops as a result of drought this year in the U.S. Midwest are expected to feed through into food prices late this year and in early 2013.
U.S. soybean prices jumped 40 percent over the summer, while wheat shot up about 50 percent. Prices have eased a bit since then, but the increases are expected to filter down to consumers.
The arrival of higher inflation also has serious implications for investors. Historically, periods of high inflation have been unfriendly for the stock and bond markets. On the other hand, gold investments tend to lead the way during periods of high inflation. This is true of a broad array of gold investments, not just gold bullion.
For example, rare gold coins tend to outperform gold bullion due to their added scarcity. They also offer security and privacy advantages over other forms of gold investment.