We notice prices rising constantly in our everyday lives, from gas to groceries. We have no control over our grocery prices besides to substitute but what if prices are raising all around? We may notice that prices seem higher but we are not sure how much they actually increased or how much more they will increase. In this post we will be exploring the Consumer Price Index and the actual effects of inflation on consumers.
There is not a set way of measuring inflation but a good measure to use is the Consumer Price Index which measures the cost of a market basket of consumer goods and services. The latest CPI numbers released from September show a 3.7% increase in all items (U.S. city average). The CPI shows medical care becoming lower in price, but rising prices everywhere else across the board. The decrease in medical expenses is great for people who need a fair amount of medical care; but for many families the rise in energy, food, and all other prices is detrimental. One issue with inflation is it declines living standards because the cost of living is rising while wages are sticky. This causes people to virtually become poorer. There has also been an extraordinary increase in housing prices from even a year ago. This is becoming a huge worry for young adults and college graduates looking into buying their first home. With the strain inflation has on consumers, economists are hoping the Fed's policies will combat inflation leading to less strain on consumers.
GregIacurci. (2022, July 15). Inflation poses a “clear and present danger,” says Manchin: Economists weigh in on how it can hurt and help consumers. CNBC. https://www.cnbc.com/2022/07/14/how-inflation-can-hurt-and-help-consumers.html
U.S. Bureau of Labor Statistics. (n.d.). Latest numbers. U.S. Bureau of Labor Statistics. https://www.bls.gov/cpi/latest-numbers.htm
I think that it is important to pay close attention to the CPI in relation to other indexes which appear to be hinting to a recession. However, as stated, it appears as though prices will be continuing to rise. However, it is important to pay close attention to how much they will continue to rise before a recession occurs. Therefore, how will people live in continued rises in prices that are more dramatic than what is occurring now? What will the job market look like for the Class of 2025 if a recession does occur in the near future? I think these are things that are practically important to continue to pay close attention to. I appreciate this post and the concern for rising prices, and what that looks like on everyday consumers.
ReplyDeleteWith the given prices of the housing and groceries, I can see why prices such as medical expenses went down. Medical prices are already very expensive on their own and with our economic state it would be very hard for someone to pay for medical expenses when prices of other things are really high. Although a 3.7% increase in the CPI is substantial, nothing compares to when we were dealing with Covid-19. It will be interesting to see what else the Fed will do to help reduce inflation and if raising interest rates will be enough before the next recession.
ReplyDeleteThe fact that many household and grocery items rose and medical prices dropped shows that these companies could very well make many products more cost effective for the consumer rather than sky rocketing prices for their own financial gain. Inflation has been one of those tricky things to really know it is where it should be since COVID as we all know the economy took a turn when COVID-19 hit. It is starting to stabilize and I think should be relatively normal in the years to come
ReplyDeleteWith everything rising in price except medical care. Inflations seems to be really having a very negative affect on consumers. Especially the standard of living seems to be very bad, the way you explained how people become virtually poorer made a lot of sense to me. I wonder if these negative effects will continue to get worse.
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