Final answer:
In periods of rising prices, the LIFO (Last-In, First-Out) inventory valuation method results in the lowest net income due to the most recent (and likely higher) costs being recorded as the cost of goods sold first.
Step-by-step explanation:
During rising prices, the inventory valuation method that yields the lowest net income figure is called Last-In, First-Out, or LIFO. Under the LIFO method, the cost of the most recently purchased items is considered the cost of goods sold first. This approach typically matches the higher costs of goods purchased more recently against the revenues, causing the net income to be lower than it would with other methods like First-In, First-Out (FIFO) or average cost method, especially during periods of inflation.
The use of LIFO in times of rising prices can affect crucial financial metrics such as net income and taxes, and its impact is tied to how changes in the prices of goods that occupy larger shares of a consumer's basket - like housing - matter more to the overall price level than goods constituting smaller shares.