Is Inflation Here To Stay?
Is Inflation Here to Stay?
According to the most recent Bureau of Labor Statistics report, U.S. inflation is currently running at a 13-year high of 5.4% - and it’s showing no signs of slowing down.
Here’s what you need to know about the current state of the U.S. economy and what you can likely expect in the coming months.
Inflation is Not Going Anywhere Soon
Rising prices in just about every sector is the new normal. The inflation rate fell at the start of the coronavirus pandemic and during the nationwide lockdown as people hunkered down at home. In March 2021, though, when the impact of halted manufacturing began hitting the market, and crude oil prices started climbing, the inflation rate increased to 2.6% before hitting its current high of 5.4% in June and July. Although the rate began falling in August to 5.3%, it went back up to 5.4% in September. Like the Trading Economics information technology company, experts now expect that number to continue rising, probably hitting 5.5% in the coming months.
Unfortunately for the average consumer who’s struggling to cover expenses amid rising costs, this means inflation isn’t going anywhere soon.
Why Are Prices so High?
There are several factors for the inflation bubble. First, suppliers are still catching up on production shortages caused by factory shutdowns during the pandemic. Second, climate disasters, like California wildfires and a drought in Brazil, are responsible for driving up prices in the food industry. The demand for higher wages, partially caused by the 10.4 million job openings in the U.S., and the rising cost of gas is also contributing to inflation.
What Can Consumers Expect in 2022?
For better or worse, shoppers are learning how to deal with the higher prices at the pump and from store shelves. Some are trimming their budgets in any way possible, while others are looking for additional streams of income to help them get by. But many are finding it challenging to survive in today's economy while hoping for better news next year.
While no one can predict the future, economists expect inflation levels to taper off by the middle of 2022. According to a Wall Street Journal survey, many expect inflation to drop to 3.4% by June 2022 and to continue falling until it hits 1.8% by the end of the year.