Have you been to a store recently? Have you noticed the prices for just about everything are getting higher? This is called inflation. Currently, the United States is experiencing its worst inflation in 40 years. What’s causing this high inflation? Experts say that there are three key factors.
First, employee wages have gone up. Since the pandemic, companies have struggled to keep employees from resigning. This means companies must keep up by raising the amount they pay workers. That sounds like good news for everybody, right? But to pay workers more, companies are charging more for their goods and services.
Secondly, demand is high. During the pandemic, people were not leaving their homes often. They were not spending much money and the government took measures to encourage spending. Now that many people are getting back to normal, they are going out and spending a lot of money. Because so many people are buying goods and services, people selling goods and services can set the price higher.
The third reason for inflation has to do with the price of gas. Due to the war in Ukraine, countries are not using Russian oil to make gas. This means the supply of oil in the world is lower, which has driven the price of oil higher. So now it costs people more money to drive to places like the store or work. Not only that, but when gas prices go higher, it costs companies more money to transport goods and services. This means they raise the prices of these goods and services.
Many people cannot afford to pay for all their needs. What can be done about it? The government is considering several actions. They are thinking about making it cost more to borrow money. They hope this will lower the demand for many goods and services. They are also looking at ways to make gas prices go lower, including a period where people do not have to pay tax on gas.
What Do You Think? Can you think of a way that inflation has affected your life?
Photo Credit: Lightspring/Shutterstock
