Get ready for another round of inflation.

Later this week, the U.S. Bureau of Labor Statistics (BLS) will announce official Consumer Price Index (CPI) numbers for September.

CPI is a measurement of inflation. It’s the one you’ll commonly hear whenever anyone talks about decades-high inflation – like we’ve seen this year.

The Cleveland Fed forecasts this number will come in at 8.2%. That’s slightly better than last month’s 8.3% and down from June’s 9.1% peak.

Now I don’t know about you, but it seems like many things I usually buy aren’t just 8% more expensive. It’s more like 20% to 50%. And in some cases, prices have doubled. So how does that make sense?

Here at Intelligent Income Daily, our focus is on finding the safest and most reliable income-generating plays. We especially love these plays because they offer protection in the face of increasing inflation.

And based on a recent announcement I’ll tell you about today, inflation could get higher – or remain elevated – for a while longer…

In today’s essay, I want to help you understand what the CPI inflation numbers mean, what this announcement is, and share some ways you can help your portfolio remain insulated against it.

How Inflation Is Measured

Every month, the BLS collects more than 90,000 prices from retail stores and service providers, as well as rental prices from more than 40,000 housing units. After crunching the numbers, it comes up with a weighted average price for various goods and services that represent consumers’ spending.

That’s why even though prices for some things may have increased by a lot, the overall reported costs for everybody are up by “just 8%.”

In August, here’s what that average spending looked like:

• 32.2% on shelter

• 21.2% on commodities, which includes clothing, vehicles, medications, entertainment, and alcohol

• 13.5% on food

• 8.8% on energy, including gasoline and utilities

• 7.6% on education and communication

• 6.8% on healthcare

• 5.9% on transportation

• 4% on other expenses

The category I’m going to draw your attention to today – that can have a big impact on the others and on overall inflation – is energy. Those prices can change a lot from month to month.  

For example, in the months after the Ukraine conflict started, oil prices jumped from $90 per barrel to $120 per barrel – a 33% increase. And that affected not only gasoline prices, but also the cost of moving goods around, which increased inflation in other categories as well.

So you can see how those are all connected. And today, we’re looking at another increase in energy costs soon.

Last week, the Organization of the Petroleum Exporting Countries (OPEC) announced its decision to cut oil production by 2 million barrels per day.

That’s the largest reduction in oil production since the COVID-19 crisis. Since OPEC produces about 40% of the world’s oil, this will have a significant impact on supply and will likely push oil prices back up toward $100 per barrel. In fact, oil is already up to $90 per barrel now compared to $80 at the end of September.

That means gas prices will probably start rising again… and things will keep getting more expensive.

And it’s why even though energy is just a small part of most people’s direct spending, when gas prices spiked to more than $5 per gallon back in June, we saw the highest CPI number since the 1980s.

Thankfully, oil prices have drifted back down over the past few months, helped in part by the federal government selling oil from its Strategic Petroleum Reserve stockpile. And that has helped the CPI number ease off a bit, too.

But now that OPEC intends to increase oil prices, we could be in for another round of rising inflation in the near future.

How to Get Ready for Potential Higher Inflation

What can investors do to prepare?

One way is to invest in energy companies like Chevron (CVX) or Exxon Mobil (XOM). They both have long histories of paying growing dividends and stand to earn more money as oil prices rise. Both have also seen double-digit growth this year but have come in some over the past few weeks.

But energy isn’t the only sector that offers income-generating opportunities in the market… I just launched a service that covers dozens of stocks that can help you grow your income every year – and keep you ahead of inflation.

It’s called Intelligent Income Investor, and most positions are currently actionable. To find out how to access this portfolio – and get the name of one of my favorite income plays today – click here.

Inflation is likely here to stay for a while. And the best we know to preserve your purchasing power is to boost your income. So don’t let this opportunity to protect your portfolio pass you by. And start making income a core part of your investment strategy today.

Happy SWAN (sleep well at night) investing,

Brad Thomas
Editor, Intelligent Income Daily