According to a report by the Bureau of Statistics, the inflation rate this year’s November is by far the highest since 1982. In November 2021, compared to what it was last year November, consumer prices rose by 6.8%.
The increase was 6.2% in October 2021. What does this mean and what is the implication to the US economy and its effect on the people of the United States of America. It’s called inflation.
What is Inflation?
The value of money is what money can buy. What $1000 can buy in 1960; maybe a brand new car; it can’t buy it in 2021. What happened? It’s the same $1000 but what it can buy has reduced; hence the value of the $1000 has reduced and the prices of cars have increased. When the average price of things goes up, it is called inflation.
The Bureau of Statistics November Report Shows:
The prices of used cars and trucks went up by 31.4 %, new cars went up by 11.1%. fast-food restaurants went up by 7.9%; Core Price Index (CPI) went up by 4.9% excluding the categories of food and energy. Gasoline rose by a 6.1% monthly rate.
The Effect of this on the economy
According to reports from the Wall Street Journal, businesses are already feeling the heat of inflation. They are increasing prices of goods and services already continuously because of an increase in the cost of raw materials and supplies, also workers scarcity.
One restaurant owner said that though there is demand for her restaurant increase in cost and scarcity of labor is killing her business. She has increased prices this year once and she is considering increasing prices again.
Another business owner of a company that makes peanut butter has disclosed that the company has increased prices on its various products. A company had to raise the prices of their turkey because the prices of feed and labor increased.
According to a survey of more than 560 small businesses conducted by Visatage Worldwide Inc. for Wall Street Journal; Sixty percent of small-business owners had increased prices in the previous 90 days, 80% reported increased labor while 72% said suppliers has raised prices.
What the Experts are Saying?
Allen Sinai, chief global economist, and strategist at Decision Economics, Inc. said that consumers are spending and a lot of people are getting hired, that there will be a need for a pullback in fiscal and monetary stimulus.
Jefferies LLC.’s Chef Financial Economist Aneta Markowska said talking of the November Report.
“I think the Fed already got ahead of today’s data by pre-announcing that they will accelerate the taper next week,”
Mr. Aichi Amemiya, the senior U.S. economist at Nomura Securities, believes that if consumers can shift from spending on goods to spending on services, it will calm inflation.