Inflation typically has a negative effect on the economy. It leads to a decrease in the value of money as items become less accessible in the market and prices increase — many of them beginning with everyday consumer goods like gas, food, and rent.
The national inflation rate has increased by three percent as of 2021. Inflation will rise by another four percent in 2022; according to the Consumer Price Index, this is the highest statistical drop in monetary appraisal since the economic recession of 1982.
This significant rise in prices is a direct consequence of the global pandemic raging today. When the pandemic first struck the nation in 2020, local convenience stores and supermarkets profited from a streak of mass, panic-induced stock-up of households.
NCSolutions, an organization that tracks consumer packaged goods, observed a surge in toilet paper sales by 734% compared to pre-pandemic years. This is only one item among the many cleaning products, like Lysol, bleach, and disinfectants, that left market shelves empty. The prices of common items increased, leaving the economy unstable.
Mass shopping is not the only reason that appraisals are high today. Inflation rates have also been caused by employment shortages.
Since September of 2021, 4.4 million workers have quit their jobs. Workers contribute to basic aspects of the economy and play a key role in balancing inflation. With these workers gone, there is a widening gap for the lack of goods and distribution, making both more expensive.
Forbes Magazine claims that excessive government spending is what has led to inflation. Since last year, the government had a $3.1 trillion budget shortfall due to spending millions of dollars on legislation.
In the last few months, inflation has increased significantly. This has been partly caused by the Russian-Ukraine war. Given that Russia is a global oil distributor, the war is affecting the oil market.
The United States imports 13.6 billion barrels of oil, 1.6 billion of which comes from Canada. Meanwhile, 187,000 barrels come from Russian imports.
Sanctioned on Russian products in the global market have stopped the Russian influx of oil. These changes have affected the U.S because companies are having a hard time catching up with new oil demands.
Inflation may have a negative impact on everyday life now, but it could potentially lead to a boom in the stock market, especially after two years of COVID.
