The Truth About Inflation

The Truth About Inflation - at www.moneyweek.com - the best of the international financial media

As the true extent of the havoc wreaked by Hurricane Katrina becomes clear and petrol prices here in the UK lurch towards £1 a litre, stock markets are being pulled in opposite directions. At a general level equities are being underpinned by the expectation that the Fed will not hike interest rates on 20 September. That's because US economic activity may slow on its own as a result of this natural disaster. Meanwhile, chances are that energy stocks will continue to thrive.

On the other hand higher petrol and domestic energy prices act as a "tax" on consumers, taking a chunk out of their discretionary spending power. This is bad news for mass market general retailers who will have to trim margins further to keep sales ticking over. But not everyone will be tightening their belts in the same way. In fact, goods and services sold to wealthier people tend to have greater pricing power. The rising cost of living affects some more than others and companies that sell luxury items stand to benefit.

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Brian has contributed to MoneyWeek with his expertise in investment strategy, for example how to quadruple your dividend income and how to navigate through the stock market in the 2008 financial crisis. He’s also touched on personal finance such as the housing market and the UK economy.