Rising inflation stems from pandemic relief and supply chain issues

The price of goods and services is rising at rates not seen since the early 1980s as inflation rates continue to rise. If you’ve been shaking your head at the grocery checkout or in pain at the pump, you have the impact of inflation “Inflation is simply the price we pay for similar goods over a period of time”, said Brian Gottlob of the Office of Economic and Labor Market Information. This increase has now reached its highest level in four decades. Economists say there are currently two major factors driving inflation. One was the government’s response to the COVID-19 pandemic in the form of monetary policy and relief funds to help support the economy. “To the tune of $2 trillion. It’s increased the money supply,” said economist Reza Jalili of New England College. “At the same time, the Federal Reserve, the central bank of the United States, increased the liquidity of the system, the amount of liquidity in the system, and brought interest rates down to almost zero.” These lower rates have pumped billions more dollars into the economy. Then economists say the second factor – also related to the pandemic – came into play. Global supply chains have become cranky and delayed, which means that in the United States, a nation of consumers, the supply does not meet demand. can’t get the parts, we can’t get the products that we need, and therefore when there’s a shortage of those things, the prices go up,” Gottlob said. too few goods,” Jalili said. This supply shock is still being worked on. But food and energy costs, which are not included in the consumer price index that measures inflation, face even greater volatility due to other considerations, such as war. in Ukraine. Economists say that once inflation is built into the economy, policy options when it comes to solving what is a complicated problem. “The one we’re going to see this year is rising interest rates,” Gottlob said. “Slow down the economy. The idea is that when you slow down the economy and the demand for goods and services, prices will rise less.” “I guess they are going to stop this inflation before it reaches what we call hyper-inflation,” Jalili said. “It will hurt a bit, but I think they will. control, because the Federal Reserve is already on it.”

The price of goods and services is rising at rates not seen since the early 1980s as inflation rates continue to rise.

If you’ve shaken your head at the grocery checkout or endured pain at the pump, you’ve felt the impact of inflation.

“Inflation is simply the price we pay for similar goods over a period of time,” said Brian Gottlob of the Office of Economic and Labor Market Information.

This increase has now reached its highest level in four decades.

Economists say there are currently two major factors driving inflation. One was the government’s response to the COVID-19 pandemic in the form of monetary policy and relief funds to help support the economy.

“To the tune of $2 trillion. It’s increased the money supply,” said economist Reza Jalili of New England College. “At the same time, we got the Federal Reserve, the central bank of the United States, to increase the liquidity in the system, the amount of liquidity in the system, and bring interest rates down to almost zero. “

These lower rates injected billions of additional dollars into the economy.

Then economists say the second factor – also related to the pandemic – came into play. Global supply chains have become congested and delayed, which means that in the United States, a nation of consumers, the supply does not meet demand.

“We can’t get the parts, we can’t get the products that we need, and therefore when there’s a shortage of those things, the prices go up,” Gottlob said.

“That’s when we say there’s too much money for too few goods,” Jalili said.

This supply shock is still being worked out. But food and energy costs, which are not included in the consumer price index that measures inflation, face even greater volatility due to other considerations, such as war. in Ukraine.

Economists say that once inflation is baked into the economy, policy options are limited when it comes to solving what is a complicated problem.

“The one we’re going to see this year is rising interest rates,” Gottlob said. “Slow down the economy. The idea is that when you slow down the economy and slow down the demand for goods and services, prices will rise less.”

“I guess they are going to stop this inflation before it reaches what we call hyper-inflation,” Jalili said. “It’s going to hurt a little bit, but I think they’re going to get it under control, because the Federal Reserve is already on it.”

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