Monthly Update
How to navigate a rising inflation and interest rate environment?
Consumers are currently experiencing record levels of inflation not seen in decades, across both developed and developing countries. Based on the latest economic data it seems probable that South Africa will follow suit. The two main measures used to determine the rate of change in prices, are commonly referred to as CPI (Consumer Price Inflation) and PPI (Producer Price Inflation).
Higher oil prices and existing global supply chain shortages caused by the Covid19-pandemic are major factors that have been exacerbated since the start of the Russia invasion into Ukraine. Increasing interest rates, act like brakes on an economy, because it reduces the capacity to take on more debt for consumers and businesses alike. This in-turn slows down the demand for goods and services in an economy, which can lead to a slowdown in economic growth over the short-medium term.
Economies worldwide have experienced these cycles for many decades and thus an increase in interest rates should not cause investors to change their long-term investment strategy. It remains true that a well diversified portfolio does become increasingly important in these uncertain times.
Read more about it here in our Monthly Newsletter :
Summary – May ’22
