Inflation Hits a 40-Year High

Plus: Payment Company Stocks to Buy You are receiving this limited-time email resource as a subscriber to Kiplinger's free e-newsletters. To unsubscribe at any time, simply click the link in the footer below. JANUARY 12, 2022 [View in browser]( HOW TO PROTECT AND GROW YOUR BUSINESS AND INVESTMENTS NOW Mounting prices lifted inflation to a 7.0% annual rate in December, the highest since 1981. New and used car and truck prices are still climbing, amid high demand and the shortage of computer chips that go in new vehicles. Food prices are still rising at a strong clip, with temporary shortages of various items. Rent has started rising with the expiration of moratoriums on rent increases and evictions. Clothing prices are still rising briskly, the result of the shipping crunch that has made imports in general more expensive. The price of personal services, such as haircuts and restaurant dining, continues to go up as the pandemic has increased costs. --------------------------------------------------------------- SPONSORED CONTENT FROM MONOGRAM ORTHOPEDICS [Invest in the Future of Orthopedic Medicine With Monogram Orthopedics]( Implant complications contribute to 10-15% of joint replacement failures annually, but with innovative robotic and implant technologies, Monogram is at the forefront of improving this accuracy. Learn more & invest. [READ MORE]( --------------------------------------------------------------- A few rays of sunshine: Meat prices edged down after jumping 15% in the past year. Likewise, gasoline prices have stabilized after a run-up of 50%. The cost of car insurance and car and truck rentals dropped. Medical care prices rose only moderately. While the inflation rate is expected to drop as the year progresses, this month’s price report is likely to get the Federal Reserve to make its first interest rate hike in four years in March, with three more hikes after that (in June, September and December). While the Fed believes that inflation will ease, it is also concerned that today’s inflation may become a self-fulfilling prophecy, as businesses expect to be able to continue raising prices, and workers continue to expect brisk wage increases. Will payment-tech blue chips rebound in 2022? 2021 was a trying time for shareholders of major [payment-services companies](. During a period in which the S&P 500 racked up roughly 27% gains, Mastercard ([MA]( +0.7%), Visa ([V]( -0.9%), PayPal ([PYPL]( -19.5%) and Square ([SQ]( -25.8%) fell prey to financial gravity. Research outfit Jefferies, however, believes respite is nigh – for most of this group, anyway. Jefferies analyst Trevor Williams says that despite underperformance in 2021, which might otherwise precede an industry-wide bounceback, he’s being more selective in 2022, believing that the competitive disruption narrative that took hold last year might take a breather, but is unlikely to reverse. He’s positive on Visa and Mastercard, for instance, claiming they have a “clean setup” and arguing that upside will come from cross-border payment services. Williams also calls Square a “top pick,” with less competitive risk than other payment sub-industries, as well as a valuation that’s attractive relative to the company’s growth. But at the same time that he reiterated Buy ratings on V, MA and SQ, he downgraded PayPal to Hold. “With our expectation for growth to remain sub-20% year-over-year through at least [the second quarter of 2022], we do not see a positive catalyst in the near term. … And with valuation still roughly five times above pre-COVID averages, we see little room for expansion.” Free download, [The Kiplinger Letter's Forecast](. No information required from you. SPONSORED CONTENT FROM SMARTASSET [7 Mistakes Comfortable Retirees Know to Avoid]( Working with a financial advisor is a crucial part of any retirement plan, but most people make these 7 avoidable mistakes when hiring one. [READ MORE]( LATEST INVESTING NEWS FROM KIPLINGER.COM [30 Best Stocks to Buy Right Now for a Home-Run Swing]( [Factoring Inflation into Your Retirement Plan]( [2022 Tax Calendar: Important Tax Due Dates and Deadlines]( [Inflation to Ease in 2022]( [Sign Up Free for Kiplinger Today -- Timely Tips to Make and Keep More of Your Money Every Day]( [Kiplinger] [Facebook]( [Twitter]( [LinkedIn]( Send this to a friend. [Click here.]( All content ©2021 The Kiplinger Washington Editors 1100 13th Street, NW, Suite 1000 Washington, D.C. 20005 Thank you for subscribing to Kiplinger's A Step Ahead, a free resource to help readers navigate the economic recovery from COVID-19. If you ever wish to stop receiving this service, please [click here to unsubscribe](.