Consumers have been squeezed by inflation for months, resulting in higher costs at the pumps, the supermarket and just about everywhere. Recent data from the United States Bureau of Labor Statistics confirms how rapidly the cost of living is increasing.
In October, the consumer price index, which measures the cost of common goods, rose 0.9% from September. But year over year, the index is up 6.2%.
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Why are the prices going up so high?
One of the main reasons consumer prices are so high is due to the laws of supply and demand. Many consumers are spending more now than they were earlier in the pandemic, so the demand for goods is high. Meanwhile, supply chain issues are causing product shortage. Whenever consumer demand exceeds supply, prices are likely to increase.
The fact that energy costs rose 4.8% from the previous month added to the pain in October. They are now up 30% from the same period a year ago.
Will lawmakers intervene?
Since the start of the pandemic, lawmakers have sent three rounds of stimulus checks to Americans’ bank accounts in an attempt to promote spending and propel an economic recovery. Now the problem isn’t that consumers aren’t spending. It’s not that they don’t want to spend, but everything costs more.
In October, the national unemployment rate fell to its lowest level since the start of the pandemic and job creation skyrocketed. In light of this, we’re unlikely to see another round of stimulus checks anytime soon.
Fortunately, some Americans are still receiving extra money in the form of the enhanced child tax credit. Payments under this credit are sent monthly until the end of the year and are expected to arrive on November 15 and December 15. But those without children may not have any additional short-term help to look forward to.
How to fight inflation
Consumers who are feeling the impact of inflation can take steps to fight back. On the one hand, those who have the option of reducing their discretionary spending might do so to save money for necessities. That could mean eating out less often and canceling gym memberships or other luxuries.
Getting a boost is another great way to maintain purchasing power during times of inflation. Those who take a second job can dramatically increase their total income and not only earn more money for daily expenses, but also for saving.
Meanwhile, taking advantage of credit card rewards could help some consumers offset their higher costs. For some, upgrading to cards with more generous cash back offers on daily expenses like gas and groceries might make sense.
When will prices start to fall?
Once supply chain issues start to resolve and there are enough products to meet demand, prices should start to drop across the board, making it easier for consumers to keep up. rhythm. But that may not happen for several months, and so it’s fair to assume that soaring inflation could be here to stay until 2022.