Increasing Worldwide Inflation

[churchill]

With most commodity prices rising strongly higher inflation cannot be far behind .

How does one protect ones investments in Thailand and overseas with inflation rising , currently around 6% and rising in Thailand . The BOT , according to today's Bangkok Post , is reducing it's reserves , as a proprtion , of US $ , and I expect most other Asian countries are doing -So a weaker dollar ? and even stronger commodity prices and more inflation ?

[jbaldwin]

I disagree with your view on inflation. My view is that there has been very little in the way of price increases outside of products directly linked to commodity prices. For example, in the UK core inflation is only 1.4%. However, the large increases in food and energy costs over the last year brings headline figure up to 3.0%. If commodity prices fall back over the next year and therefore act as deduction from rather than an addition to core inflation then I think that the possibilty of deflation could very quickly become more of a concern than inflation. House prices are falling in many developed economies (including the UK, US, Australia, Spain). It is very unusal to have rapidly rising retail prices when house price fall.

However, if you consider inflation to be a major risk then the only real hedge is to buy shares in companies that you feel have a better ability to pass on rising costs. Hospital groups might be a good example of this.

Also if you believe that the US dollar will continue to fall then you want to look for companies that import raw materials but sell into the Thai market and avoid firms that produce in Thailand but export a high proportion of output.

[Firefan]

Inflation is everywhere these days. My estimate for the last few years in Thailand have been about 10%/year. Same applies to my Eu home country.

How to protect yourself? Well, "real stuff" seems to be the general choice - be that companies that own mining/rights or commodity funds/commodity futures funds directly.

With the falling house prices there might also be an oppurtunity for picking up some real estate at resonable prices. If based in Thailand getting rid of inflation risk/currency risk on rent, by owning, could make a big difference in the future.

Cheers!