Morningstar's Inflation Report

Like most consumers, you undoubtedly felt the sting of inflation at the gas pump this spring (and hopefully have felt a bit of relief as prices abated over the last few weeks). But as uncomfortable as a short spike in prices can be, over the longer term, the milder inflation we typically see can be even more brutal. 

Compounded over many years, inflation can actually be an enormous swing factor. Accounting for a normal inflation rate of 3.5% can more than double the amount that a 50-year-old investor needs to sock away for retirement.

This week Morningstar's analysts and strategists--including our director of personal finance Christine Benz--along with several outside experts will weigh in on the inflation picture today, offer a forecast for the coming months, and size up the pros and cons of traditional inflation-fighting tools at investors' disposal. We'll also take a closer look at how investors can construct portfolios to stay ahead of the scourge of higher prices.

Stay tuned to this Inflation Report landing page Wednesday through Friday this week. We'll release a new series of reports each day. Afterward, you can return to this page to check up on anything you may have missed. 

Inflation Report: Editor's Picks
Is Inflation Hot Enough to Burn?
Recent levels of inflation bumped up against the danger zone but should cool off over the next several months, says Morningstar's Bob Johnson. (video)

Arnott on the Inflation Picture Today
With some luck, we may have some time yet to buy inflation hedges at cheaper prices before the arrival of the 3-D hurricane (debt, deficits, and demographics), says Research Affiliates chairman Rob Arnott.

Consumers Feeling More Pain Than Inflation Stats Suggest
Oppenheimer's Alessio de Longis says commonly followed inflation statistics are not necessarily reflecting how higher import prices are pinching consumers' purchasing power. (video)

Our Picks for Inflation Protection
We highlight some of the best ideas among mutual funds, ETFs, and individual stocks.

How Much Should Retirees Stake in TIPS?
Here's how you can add inflation protection to your portfolio, sensibly.

Inflation Protection Beyond TIPS
Morningstar Investment Services' Marta Norton discusses incorporating real estate, commodities, high-yield, bank-loan, and global exposure to broaden a portfolio's inflation protection. (video)

Know Your Own Inflation Rate
Morningstar's Christine Benz outlines how to gauge your own personal susceptibility to inflation in order to formulate a more customized strategy for outpacing higher costs. (video)

How to Inflation-Adjust Your Retirement-Portfolio Withdrawals
Getting this calculation right can help ensure that you keep up with cost-of-living increases but don't outlive your savings.

Plus, hear inflation-fighting strategies from noted financial planners Harold Evensky and Mark Balasa.

Wednesday | July 20: Forecast for Inflation
Hear from Morningstar's Bob Johnson plus a group of inflation-focused fund managers on the factors that have driven prices sharply higher in 2011 and whether they will persist. Also understand why the government's official measures of inflation may be disconnected from the higher prices you're actually experiencing in your day-to-day life.

Is Inflation Hot Enough to Burn?
Recent levels of inflation bumped up against the danger zone but should cool off over the next several months, says Morningstar's Bob Johnson. (video)

Arnott on the Inflation Picture Today
With some luck, we may have some time yet to buy inflation hedges at cheaper prices before the arrival of the 3-D hurricane (debt, deficits, and demographics), says Research Affiliates chairman Rob Arnott.

PIMCO's Worah: We See Higher Inflation Longer Term
Our expectation is for inflation to be somewhat higher than the 2.0%-2.5% rate that we have gotten used to over the last 20 years, says PIMCO Real Return manager Mihir Worah.

Consumers Feeling More Pain Than Inflation Stats Suggest
Oppenheimer's Alessio de Longis says commonly followed inflation statistics are not necessarily reflecting how higher import prices are pinching consumers' purchasing power. (video)

Does CPI Tell You What You Need to Know About Inflation?
Not all inflation rate statistics tell the same story.

Atteberry: Commodities Playing a Greater Role in Inflation
The FPA manager on the current inflation situation and accelerating government fiscal policy risk.

U.S. Not Wagging the Inflation Tail
Though the U.S. historically has been able to control global inflation to some extent, emerging markets are now moving into the driver's seat, says Driehaus manager K.C. Nelson. (video)

Could Stagflation Come Back?
A rapid rise in prices could force the economy's already-anemic growth rate lower.

Weaker Dollar, Supply Disruptions Fueling Inflation
With a recent decline in oil prices, inflation pressure should ease a little bit, says JPMorgan's Deepa Majmudar. (video)

Thursday | July 21: Survey of Inflation-Fighting Investments
We'll dig into what investors should know about TIPS, commodities, equities, and some of the newer alternative strategies, and check in with noted financial planners and fund managers with inflation-fighting or real return mandates to see which tools they're using today. We'll also survey some of Morningstar's favorite investments in these areas today.

Our Picks for Inflation Protection
We highlight some of the best ideas among mutual funds, ETFs, and individual stocks.

These Stocks Offer Insulation Against Inflation
Look for these key characteristics, as well as some top picks, when shopping for inflation-beating stocks.

Fighting the '-flations' with Utilities
Our top utility picks during periods of inflation, deflation, or stagflation.

How Much Should Retirees Stake in TIPS?
Here's how you can add inflation protection to your portfolio, sensibly.

How to Determine if TIPS Are Cheap or Expensive
This analysis sounds easier than it is.

TIPS Versus I-Bonds: How to Choose
I-Bonds boast tax advantages, but purchase limits damp appeal.

Seeking Inflation Protection with More Yield
Deepa Majmudar's funds use high-grade short- to intermediate-term bonds with an inflation swap overlay to pick up yield over money market rates and TIPS. (video)

Retirees: Look Before You Leap Into Commodities
Bad timing could obliterate the long-term benefits of these investments.

Currency Hedge Could Take the Sting from Inflation
Having exposure to the foreign currencies of our biggest trading partners would have served as a very effective hedge against recent import-price inflation, says Oppenheimer's Alessio de Longis. (video)

CEFs for Inflation Protection
Here are three noncommodity CEFs to protect your portfolio from inflation.

Using Alternatives to Fight Inflation
ETF analyst Tim Strauts explains how fixed-income alternatives could buffer your portfolio in a rising rate environment, or offer more equitylike exposure with less volatility. (video)

Short Duration with an Alternative Bent
Driehaus manager K.C. Nelson explains how the firm's fixed-income alternative funds aim to control risk and offer diversified returns. (video)

Friday | July 22: Building an Inflation-Fighting Portfolio
Morningstar's Christine Benz along with experts in Morningstar Investment Services will discuss how investors can correctly factor inflation into their portfolio plan and put together a mix of investments that will give them the best shot at staying ahead of higher prices. 

Benz: Simple Ways to Inflation-Protect Your Portfolio
Direct and indirect ways to hedge against higher prices.

Inflation Protection Beyond TIPS
Morningstar Investment Services' Marta Norton discusses incorporating real estate, commodities, high-yield, bank-loan, and global exposure to broaden a portfolio's inflation protection. (video)

Know Your Own Inflation Rate
Morningstar's Christine Benz outlines how to gauge your own personal susceptibility to inflation in order to formulate a more customized strategy for outpacing higher costs. (video)

How to Inflation-Adjust Your Retirement-Portfolio Withdrawals
Getting this calculation right can help ensure that you keep up with cost-of-living increases but don't outlive your savings.

What Evensky Bakes in for Inflation
Harold Evensky of Evensky & Katz Wealth Management says his firm uses a 3% longer-term inflation rate but remains concerned that inflation could run higher in the short term. Evensky also comments on health-care inflation assumptions and long-term care insurance. (video)

Evensky: We're Playing Defense in Fixed Income
Evensky & Katz's Harold Evensky says his firm has shortened its duration target and added exposure to unconstrained bond funds to play defense against inflation and rising rates. (video)

Evensky on Inflation Protection for the Long Haul
Because equity returns may be lower than historical norms, younger investors really need to focus on maximizing long-term real (after-inflation) return and minimizing taxes and expenses to have anything left, says Evensky & Katz's Harold Evensky. (video)

Balasa: Inflation Could Flare in the Intermediate Term
Planner Mark Balasa of Balasa Dinverno Foltz says he's repositioning clients' fixed-income allocations to be prepared for potentially higher intermediate-term inflation. (video)

Balasa: How We're Prepping Portfolios for Inflation
Planner Mark Balasa of Balasa Dinverno Foltz has been shortening fixed-income durations, increasing allocations to TIPS, and employing flexible bond funds to fend off inflation. (video)

Customizing Inflation Protection
Investors should consider their time frame, need for income, and tolerance for volatility in building a diversified inflation-protection allocation in their portfolios, says JPMorgan's Deepa Majmudar. (video)

Which Bucket for Alternative Funds?
Driehaus' K.C. Nelson says investors may consider alteratives such as his funds to diversify a segment of their portfolio or as part of a dedicated absolute-return-focused allocation. (video)

Seven Steps to Manage Rising Health-Care Costs
Medicare premiums are rising for high-income beneficiaries under health-care reform law.

Inflation Could Destroy Your Retirement if You Don't Plan Ahead
The prospect of rising costs is a huge swing factor when setting savings targets for your golden years.