Inflation accounts for at least half of the price of oil today.
Almost everybody understands that low inflation, good fiscal accounts and healthy international reserves are essential.
Instead, all of its inflation will burn through our bank accounts right here at home.
Most deposit accounts offer below-inflation rates of interest.
After factoring in inflation and, in the case of non-registered accounts, taxes, the real return is negligible to negative.
With inflation expectations that exceed the nominal interest paid on saving accounts, money market funds, and Treasuries, real returns are negative.
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Dearer oil will stoke inflation, especially through higher food prices and food still accounts for a large part of people's spending in countries like China, Brazil and India.
But growth also brought inflation, which crippled Brazil until the mid-1990s and still accounts for some odd characteristics, such as the country's painfully high interest rates and its disinclination to save.
Investors money is tied into these accounts, and so the interest paid can fall if the inflation rate drops in subsequent months.
Each year's number is discounted back to the present at a discount rate that accounts for the growth of the ten-year Treasury, inflation and equity risk, which stands right now at 8.4%.
While the Fed keeps the yield on overnight loans at 0% and investors price ten-year Treasury bonds as if prices will barely budge over the coming decade, inflation is lurking in many corners of the economy--like shipping, which accounts for 7% of gross domestic product.
Simply put, investors in those countries who have parked their savings in cash and low-yielding investments, such as Treasury bills and money market accounts in the U.S., are actually losing money due to inflation.
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Motor fuel also accounts for a larger share of Americans' spending, so falling prices will depress inflation by more.
While inflation costs all consumers, it is especially hard on those who depend on money market and savings accounts for income.
Our Treasury mandarins forget that the inflation we suffer at home will cost us more than whatever temporary advantage we gain on our trade accounts from a devalued dollar.
One reason for Estonia's high-ish inflation is the rise in the oil price, which, according to the Bank of Estonia, accounts for 2.4 percentage points of the current figure.
Assets in savings accounts may actually be losing value thanks to short-term interest rates that are actually lower than the inflation rate.
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