Inflation (and why prices keep rising this year) essentially boils down to good old-fashioned supply and demand: when consumers demand more goods than inventory can supply, prices rise. Usually, the increase is incremental, with wages keeping pace with any upticks in the cost of living. But nothing since COVID hit has been usual.
We Want To Hear From You: Is Inflation Affecting How You Spend Your Money?
The Bureau of Labor Statistics recently cited that the cost of goods across all items has risen 6.2% over the last 12 months. Meanwhile, incomes have yet to caught up. People attempting to “make do” has so far led to less overall spending, which historically leads to more stagnant economic growth, which leads to less overall spending, and… well, you get the idea.
The rising costs of nearly everything have affected more than just supermarket staples. Seafood prices soared by 11% back in August, resulting in restaurants removing such once-beloved items as lobster due to ongoing port congestion and fishing sector labor shortages. And even new (affordable) construction has taken a hit in recent months, with lumber prices go through the proverbial roof. It seems nothing is safe from inflation’s grasp.
Take Our Poll: How Is Inflation Changing Your Spending Habits?
The Federal Reserve has assured the public that the current elevated inflation is only temporary through the end of the year due to “transitionary factors,” including still-lingering supply chain challenges. However, January is a long time away for anyone wondering how they’re going to stretch their same paycheck to cover monthly bills (on top of holiday spending) right now. This unease is measured by the University of Michigan’s Consumer Sentiment Survey, which shows a steady decrease in consumer confidence despite receding coronavirus cases across most of the country. While there are some winners (those with fixed-rate mortgages or other similar debts, along with precious metals investors), for the most part, we’re all losers in the inflation game.
More From GOBankingRates
- Consumer Price Index Shows Food and Gasoline Prices Surged Again In October
- What Should Americans Expect With Inflation in the Coming Months and Years?
- Consumer Sentiment Remains Low, Gains Edged Out by Highest Rate of Inflation Uncertainty in ‘Nearly 40 Years’
- Inflation Winners and Losers: Who Benefits When Inflation Rises?