With the monthly inflation numbers coming out relatively soon, economists expect that inflation has risen 1.1% this past month. This is not extremely significant growth, however, the year over year gain is expected to be 8.4% which would be the highest since December 1981. February also saw a great increase in inflation with a .9% increase from the previous month and year over year gain of 7.9%. These numbers were the highest since early 1982. The likely causes of this jump in inflation are food and energy, although the cost of housing has also continued to rise over this period. Luckily, the high gas prices seem to have broken, as the prices of barrels have fallen to $94 on Monday. This high inflation will also likely decrease CPI. Zandi projects a fall of 4.9% by the end of this year. This is likely due to the Fed being expected to tighten the money supply aggressively in order to calm the high inflation.
Another contribution to the growing inflation has to be the stimulus packages that were passed in 2020 and 2021. Yes those packages stimulated the economy but, its effects are being lived out right now.
ReplyDeleteNow, everyone knows what inflation stands for. Since the begging of the year, inflation is everywhere, news, internet, etc. I hope, this is the highest number that we see. Many people struggle and there is not many solutions for it
ReplyDeleteThe inflation rate will continue to rise unless the Fed imposes a strict contractionary monetary policy to stop it. The cost of fas prices only came down as a result of world prices and not as a result of domestic policy so it is likely to rise again.
ReplyDeleteInflation is definitely the talk of the town right now in the economy world. If growth in year over year gain is expected to be 8.4%, you can expect this talk to continue and even grow as ideal inflation is around 2% which is nearly what you mentioned on just a monthly basis.
ReplyDeleteThis is a scary prediction for the future of the world economy. Do you believe that the continuing inflation and rise in gas prices will mirror the era of "stagflation" that occurred in the 70's?
ReplyDeleteInflation is the main concern on everyone's mind. The economy is growing record high inflation which primarily can be attributed to the massive stimulus packages we saw during the pandemic. However, the Fed is trying to counter this with their increase in interest rates. Hopefully they do not increase them too much too fast as that could also cause significant issues for our economy.
ReplyDeleteThis is obviously an issue as food and energy are major causes for concern. I have also heard about issues with the food supply for the near future and I wonder how that plays in this.
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ReplyDeletePrice increases for gas, shelter and food were undoubtedly the largest contributors to inflation. These factors are brining the most uncertainty for consumers today as well. This will be interesting to watch in the future as gas prices are directly feeding off of the energy prices spiking because of Russia’s war in Ukraine. Between inflation, the war and more, external factors will need to be monitored as they’re playing a pivotal role in our economy.
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