Inflation is rising in the United States. Retailers are increasing prices, and consumers are taking on more debt. The economy was initially on a post COVID-19 rebound. As COVID cases begin to surge again, economic growth is affected.
Inflation in the United States has been low and steady for a long period of time. However, it is still very much an important threat to our economy. Higher inflation would hit the poor harder than anyone else because they wouldn’t be able to adjust their buying habits as fast as more well-off people.
Inflation means a continuing rise in the general level of prices that persists over a period of time. Inflation is a sustained increase in the average price of commodities, caused by an increase in the amount of money and credit that is circulating.
Some countries experience inflation as the result of excessive spending on military goods and services, as well as expensive wars. A government may implement measures that are designed to restrict inflation, such as reducing expenditures, raising taxes, or limiting lending.
By increasing the interest rate, it makes investments in short-term debt less attractive than long-term ones. For example, the government could increase the interest rates on U.S Treasury bills and bonds to discourage borrowing and spending.
Some economists favor an independent central bank that can adjust its policies as needed in order to control inflation.
Inflation in the past
The period of time between 1970 and 1982 is known as the era of stagflation. Employers had started to raise their prices by raising their rates to compensate for wages that were not keeping up with inflation. There are a few explanations for how inflation happens in the US but it usually starts with a combination of unemployment, stagnant economic activity, and high levels of excess capacity in the market. The United States has been experiencing deflation since 2009 because the price level has fallen steeply after going through a period of significant growth. This slump was caused by the Great Recession and America’s reduced need for imports due to lower oil prices.