Inflation: Why do Prices Keep Rising?

Inflation is a measure of the rate of rising prices of goods and services in an economy. This can happen due to high demand for products, population growth, or an increase in production cost. Although prices do go up, this would mean wages also need to rise to keep others alive. 

Inflation isn’t such a bad thing all the time. In the United States where we live, for the past 40 years we have been living in a low and slow level of inflation with only 2% of prices going up every year or so, prices of goods and electronics did become much cheaper, but this isn't really the case for housing, health care, etc. Many economists complain about the housing prices for the most part; housing inflation moves up and down at glacial speed due to how the government measures it, economists said. To be specific, some data of the inflation are: vehicle insurance increased by 16.5% from August 2023, medical care increased by 3%, recreation increased by 1.6% and education increased by 3.1%. Although this is the case for price increases, some prices did subside like the prices of groceries and gasoline. “We’d expect inflation to continue to subside,” though with “some ups and downs” in the data from month to month, House said.

But why is inflation all over the news?

Since then the biggest increase in prices in one year was in 1990 November, since the Federal Reserve’s long-term goal is to keep inflation prices at only 2% of an increase every year. The consumer price index– which measures how fast prices are going up measured to a 2.5 increase in August.

The good thing is the August inflation reading is significantly lower than 9.1%, the pandemic era peak which was the highest it has ever been since 1981. It is also near the policymaker’s goal of 2%. “Overall, inflation appears to have been successfully tamed but, with housing inflation still refusing to moderate as quickly as hoped, it hasn’t been completely vanquished,” Paul Ashworth, chief North America economist at Capital Economics, wrote in a note on September 11. With this note to mind, federalists are expected to cut down the inflation rate any time soon. 

So inflation represents the economic growth of a country. But if inflation is the reason that snack prices are going up, then it’s a pain in the arise. What do you think?