Canadian Pacific Just Prevented Inflation From Stealing More of Your Money

What happened?

The shares of the Canadian Pacific Railway (TSX: CP)(NYSE: CP) are trading on a bullish note on Tuesday morning after it announced a deal to settle a labour dispute. While CP stock didn’t see enormous gains after the news came out, the Canadian railroad giant’s recent move might have just prevented the ongoing inflationary pressures from worsening and stealing more of your money. Let me explain how.

So what?

Earlier today, Canadian Pacific revealed that “it has reached agreement with the Teamsters Canada Rail Conference (TCRC) – Train and Engine Negotiating Committee to enter into binding arbitration.” It CEO highlighted how this agreement enables the company to return to work from Tuesday and resume its essential services.

A large number of businesses across North America depend on Canadian Pacific Railway’s services. That’s why a recent labour strike at the railroad company made the Canadian and the U.S. governments extremely worried because it had the potential to worsen the supply chain disruptions, which could lead to further increases in the prices of food and other commodities. In such a scenario, most of the affected companies usually pass on increased costs to their customers, resulting in higher inflation that ultimately steals more money from consumers’ pockets.

For a little background, businesses across the world have already been struggling from enormous supply chain issues since the COVID-19-related shutdowns and other restrictions began. Some experts predicted these supply chain disruptions to gradually subside as the global pandemic-related restrictions are lifted. However, these predictions didn’t turn out to be accurate, as these supply chain disruptions continue to hurt businesses across sectors even today.

These supply chain issues have been one of the key reasons that have increased inflationary pressures lately — so much so that the U.S. Federal Reserve chair Jerome Powell recently mentioned them in his latest speech on the economic outlook. On Monday, Powell highlighted how “the combination of the surge in goods demand with supply chain bottlenecks led to sharply rising goods prices.”

Now what?

Whether you are a consumer or a stock investor, high inflation hurts everyone. That said, you can choose to invest your hard-earned money in some safe stocks that could help you get outstanding returns in the long term and reduce the impact of high inflation on your financial goals.

As I mentioned above, today’s big news didn’t trigger a massive rally in CP stock. However, even if the stock maintains these minor gains to settle at current levels for the session, it would be its highest closing price ever. Despite CP stock currently trading at its record high levels, I find it attractive for long-term investors. Consistently surging demand for its services and its expanding network — especially after its recent acquisition of Kansas City Southern — make Canadian Pacific stock worth buying for the long term, as these factors could keep it soaring.