Inflation Is Still Rising
By Jim Bauer
@porwest (78757)
United States
March 12, 2024 8:16am CST
I had an interesting discussion with someone outside of here who clearly did not understand how inflation works. They thought if the Fed gets it right and gets inflation to the desired level of 2% that prices are likely to go down.
Not necessarily.
Some prices may stabilize, but we are pretty much stuck with the prices we have now for the most part because the inflation has already occurred. In order for prices to come down we would need to experience deflation, something that is actually worse than inflation, so we don't want that.
In February inflation rose 0.4%, and inflation is still 3.2% higher than it was a year ago. So, by that measure it is still slowing, but not at all going down. The uptick was mostly due to a 2.3% increase in energy costs, something that continues to be a major contributing factor to rising prices on everything else.
What that means is that one year ago things rose 6%. One year later the prices are 3.2% higher than they were a year ago. If your bread was $2.50 a loaf two years ago it was $2.65 a year ago and is $2.73 now.
The bottom line is, we're not out of the weeds yet. As for the person I was discussing this with, it took a while to explain, but they finally got it.
6 people like this
6 responses
@LindaOHio (158794)
• United States
13 Mar
Our car and home insurance went up an exorbitant amount. At least $50 apiece. It might have been more...I don't remember. I understand that since we are older, car insurance does go up; but home insurance??? I guess because replacement costs are so much higher? Just a guess. Have a good day.
3 people like this
@dgobucks226 (34515)
•
16 Mar
Yes, that's right. Mine went up over 10% for home insurance from last year.
2 people like this
Correct, only gas goes up and down all the time, but it also ends always at a higher price than the starting price.@porwest (78757)
• United States
13 Mar
@LadyDuck Pretty much any commodity can be influenced, of course, by what is happening with supply and demand with the commodity, and food is also, of course, a commodity. So, SOME food prices CAN come down. It just depends. Too many variables.
1 person likes this
@porwest (78757)
• United States
12 Mar
Inflation is a constant. What is different is the rate of it. In the U.S. for 40 years, we had inflation that was nearly nonexistent. The aim is 2% and we maintained under that for all those years. Since 2021 the cumulative expansion on prices has been around 20%, so that's averaged out to around 7%, massively higher than the norm and the desired rate.
1 person likes this
@dgobucks226 (34515)
•
16 Mar
And people's purchasing power even with slight wage increases have not kept up with the rate of inflation. This is why Trump appears to be gaining support among minority, lower income and middle-class voters who are feeling the price increase the most.
As Trump says, some "Drill Baby Drill" could go a long way to getting our economy back on track along with tariffs on countries who continue to take advantage of the current administration.
1 person likes this
@porwest (78757)
• United States
18 Mar
With energy being such a large part of the rising inflation, doing anything to get those costs down will have a ripple effect on the rest of the economy. People don't want to understand the impact of Biden's words on day one, "I will reverse all of Trump's energy policies."
As I have pointed out a few times you can actually put your finger on the two biggest drivers of the inflation we are experiencing.
In December of 2020 inflation was right around 2%. In January of 2021 Biden reversed Trump's energy policies. In March of 2021 Biden passed the American Rescue Plan which truckloaded money into the economy at a time when it was already in a recovery from the pandemic. It kept people home longer and helped to fuel a major supply chain crisis and labor shortage. By December of 2021 inflation was at 10%.
When you think of the impact of diesel alone and the cost it adds, people have to consider that a truck that runs on diesel trucks the raw materials to the factory. Then a truck takes the finished goods from the factory to the warehouse or distribution center. Another truck moves it from there to the store. Even if the goods are moving by train, all the trains run on diesel. So do the cargo ships.
Anyway, I could go on and on. lol
@cabuyogty (2349)
•
13 Mar
It's the same here in my place. Prices of basic needs are always so high and i can feel it.
1 person likes this
