Heresy Financial: China, the Fed and the Middle East War – ALL Pushing Prices Higher

The inflation story is dead, even after inching slightly up in this week’s latest data. Yes, inflation isn’t quite down to the Federal Reserve’s 2% target level. But, it’s under 3% compared to a high of over 9%.

The central bank is now shifting gears to prevent the labor market from unwinding. With that shift, interest rates will trend lower. That could help make it easier for businesses to expand and consumers to borrow. In turn, that could mean inflation ticks higher.

That likely won’t mean a return to inflation rates over 5%. But inflation could stubbornly hang out near 3% for a prolonged time.

However, other factors could help push inflation up.

China recently unveiled a stimulus plan to get its slowing economy moving higher again. That could mean higher prices, and a push higher for commodities that China needs to grow.

Plus, in the Middle East, there’s a potential for an escalating conflict. That could cause key parts of the world, such as the Strait of Hormuz, to move off-limits.

That could help push oil prices higher. Higher energy costs will quickly show up on inflation measures as energy is a key component for manufacturing. And higher gas prices mean consumers have less money to spend on other activities.

To look at the full list of factors that could lead to resurgent inflation, click here.