Jones: How to defend yourself against the inflation mugger

Ronald Reagan claimed inflation was as "violent as a mugger, as frightening as an armed robber and as deadly as a hitman."

UK CPI annual inflation came in at 4.5% in May, unchanged from April, but the inflation rate remains well above the central bank’s 2% target for the 18th consecutive month, on rising food and energy prices. Expectations also remain elevated: Barclays Capital has forecast a peak in RPI inflation later this year of 6.4%, and other respected houses are talking about CPI above 5% this year too…10-year gilts at 3.22% anyone? Our argument is why invest in sub-3% gilts which under elevated inflation conditions, would incur a negative real yield? The way we have positioned the portfolio is s...