Have you ever been out shopping and wondered, “why is this so expensive?” or “I could’ve sworn this was cheaper before.” So, why are the prices of everything going up? Inflation.
Today’s young adults have to pay more for a car or home than their parents did. This is known as inflation: the general increase of the cost of everyday items, from gas to food to even cars and houses.
Many experts say a little inflation is a sign of a healthy economy. The Federal Reserve aims to keep the inflation rate at around 2%. However, from June 2020 to June 2021, the Consumer Price Index rose 5.4% – the fastest jump since 2008. Whether prices will keep rising, how fast, and how long, is still to be determined.
An insane amount of items in just about every spending category’s prices are rising. Items that took a hit during the pandemic and are now bouncing back; industries such as airfare, hotels, restaurants, and gas have increased their prices. Products that have been in short supply like semiconductor chips and the items that use them have also risen in prices.
Some reasons for this inflation can be economic recovery, changes in weather, or supply chain disruptions. Economic recovery is when the economy starts to pick back up after a downfall, like after a global pandemic. Prices tend to go up because people are more willing to spend when they have more money and business, in hopes for more profit, raising prices.
Weather changes also contribute to inflation because many raw materials are negatively impacted if the weather is too cold or dry. This can lead to shortages of goods like corn and wheat, which lead to added costs that trickle down to consumers.
Supply chain disruption is when producing goods is a process, and if it breaks down anywhere along the line, it can impact how much of a product is available to the public. That can happen when there is an internal interruption, like a shortage of workers, or an external interruption, like a major storm that prevents a company from distributing its goods.
It is normal to worry about inflation. But is it time to start stealing gold and hiding them in your secret bunker? Probably not. However, with so much pent-up demand from last year and so many products in short supply, most consumer analysts say don’t expect a break anytime soon.
