Inflation hasn't been a problem for investors for a long time, with the Consumer Price Index having risen just 1.2% over the past year. But after being dormant for so long, some worry about whether inflation in 2014 might jump to higher levels. Are their concerns valid?
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks more closely at inflation and its impact over the past 12 months. Dan notes that for those who've seen little wage growth, stable prices have been good, but the Federal Reserve would prefer to see inflation at somewhat higher levels of around 2%. Dan points to the energy markets as a key reason for low inflation, as gasoline prices are down more than 5% from year-ago levels. Dan explains how that's been bad news for refiners Marathon Petroleum (NYSE: MPC ) , Valero Energy (NYSE: VLO ) , and HollyFrontier (NYSE: HFC ) , even though cheap crude availability has still allowed them to be profitable. Dan concludes that if plentiful energy supplies keep prices low, it could further dampen inflationary pressure for years to come.
Dealing with inflation
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