Eagle Times Bulletin

  • 2017-2018 School year begins Monday, August 28, 2017

Inflation Here and Now

Harrison Boyd, Writer

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Inflation in the United States currently records at 2.10%. The rate, not too high for the economy, causes small amounts of turbulence in the stock market. Nowadays, widespread fear of inflation appears evident as products in stores increase in price, while portions of products shrink.

Inflation causes panic in the population because money then decreases in value. Inflation results from the sustained rising of crude oil, beverage, or food prices. The Federal Reserve works to control inflation.

Contractionary monetary policy, slowing the economic growth process reduces the rise of prices with too few of goods. Output of product slows in order to raise prices.

Gas prices, continuously fluctuating, recently increased 5.7% because of rising oil prices. The demand for oil causes spikes in prices, while the OPEC attempts to limit output with the goal of raising prices.

In addition to oil prices, the cost of healthcare services also rose 2%. The unsteady rising and rebounding of prices hint the presence of inflation

The inflation target over the years, stood at a rate of 2.0% with inflation rates in the U.S. remaining at 1.8%; 0.2 below the threshold.

Consumers see how inflation draws more money from their family budgets. They eventually experience a lower standard of living. Citizens in the U.S. panic as they watch inflation climb and they search the Consumer Price Index to determine how to adjust their budgets to deal with this problem.

The Consumer Price Index reports that between 1997 and 2017, consumer prices rose 52%. However, people’s wages, increased only 10% in the 20 years. Therefore, workers lose their quality and standard of life from falling behind with keeping up with the cost of living.

Rumors concerning inflation sent the stock market in a downward spiral at the start of the year. The Federal Open Market Committee discussed raising interest rates this year, not only one time, but also several times. This scares conservative investors in the stock market, and many sold their investments.

Meetings between the Central Bank committee members drew conclusions that fluctuating inflation rates heighten the need for raising interest rates of 1.5%. This consensus, drawn in late 2017 remained through the beginning of 2018, instilling fear in investors, causing sharp declines in the market.

Inflation affects everyone in a consumer society. Inflation will stop when the monetary system returns to a gold standard and the United States government follows disciplined fiscal policy.

Inflation–an economic lesson in government policy failure!

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