Background on the inflation environment.
(As with the previous discussion, this comment is cross-posted from my other blog, Attestation Update. This information is useful not just for CPAs interpreting the financial results of their clients, but also for readers of this blog, because the rapid run-up of inflation fears is a risk to economic freedom. If we return to the devastating inflation rates of the 1970s, we would see severely harm to economic freedom.)
Previous post suggested It’s time to start monitoring inflation. The dramatic increase in inflation rate in March and April 2021 suggests we need to be watching the inflation numbers more closely.
Not only does this help us generally understand what is going on around us, but specifically it helps us understand and interpret our clients’ financial results as we provide audit and review services.
A few articles I have found helpful in the recent weeks providing context on the inflation environment:
5/5/21 – Wall Street Journal – Everything Screams Inflation – Columnist senses a possible shifting point from the low inflation we have seen for a very long time, going back to a sustained period of high inflation.
He cites five general trends which point towards years of high inflation:
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