With recent data coming out that shows inflation might be slowing, there is still a massive amount of concern left for the economy.
Townhall reports, the CPI measures changes in prices paid by consumers for a basket of goods and services, including food, housing, apparel, transportation, medical care, recreation and education. The index rose 0.4 percent in February from January 2021, which is double what economists had predicted. This marks the fifth consecutive month of increases in inflation as the economy continues to recover from the pandemic-induced recession.
The biggest contributors to rising prices were gasoline and food costs. Gasoline prices jumped 7 percent from January to February 2021 due to higher crude oil prices and supply disruptions caused by winter storms across parts of the country. Food costs also rose 1 percent over the same period due to higher prices for meats, poultry, fish and eggs.
In addition to rising gas and food costs, other factors are contributing to inflation such as increased demand for goods due to stimulus checks and an increase in labor costs as businesses compete for workers amid low unemployment rates. With more people getting vaccinated against COVID-19 every day and restrictions being lifted across many states, there is likely to be an even greater demand for goods and services as people start spending more money again on travel and entertainment activities they have been missing out on during lockdowns.
As inflation continues to rise at an alarming rate it is important for consumers to be aware of how this could affect their finances in the long run. Higher prices mean that consumers will have less purchasing power with their money which can lead to financial hardship if they are unable or unwilling to adjust their spending habits accordingly. It is also important for businesses to keep an eye on inflation so they can adjust their pricing strategies accordingly in order to remain competitive while still making a profit.
Inflation may be inevitable but it doesn’t have to be unmanageable if we take steps now towards understanding its effects on our finances and plan ahead accordingly so we can continue living our lives without worrying about rising prices eating away at our savings or income streams.