Consumer Price Index inflation is the highest it has been in over four decades. Greg McBride, chief financial analyst with Bankrate.com, joins “CBS News Mornings” to discuss some of the factors behind the latest numbers.
#News #Inflation #ConsumerPrices
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In recent months, there has been a noticeable rise in inflation across the globe. This trend has sparked concern among economists, policymakers, and consumers alike. But what exactly is causing this surge in inflation?
There are several factors contributing to the rise in inflation. One significant factor is the surge in demand as countries emerge from the COVID-19 pandemic. With the easing of restrictions and the reopening of economies, consumers are resuming their spending habits, leading to an increase in demand for goods and services. This surge in demand has put pressure on supply chains, leading to shortages of certain goods and an increase in prices.
Another contributing factor is the disruptions in global supply chains. The pandemic caused widespread disruptions in global supply chains, creating shortages of raw materials and components. As a result, the cost of production has increased, leading to higher prices for consumers. Additionally, the global shipping crisis has led to higher transportation costs, further adding to the rise in inflation.
Rising energy prices have also played a role in the inflationary pressures. The surge in demand for energy, coupled with supply constraints, has led to an increase in energy prices. This has translated to higher costs for businesses and consumers, leading to overall inflationary pressures.
Central bank policies have also contributed to the rise in inflation. In an effort to support economies during the pandemic, central banks around the world implemented loose monetary policies, including low interest rates and quantitative easing. While these policies were critical in supporting the economy during the pandemic, they have also contributed to the rise in inflation by increasing the money supply and fueling demand.
The labor market is also a factor in the inflationary pressures. As businesses struggle to fill job vacancies, they are facing higher wage demands from workers. In order to attract and retain employees, businesses are raising wages, which in turn increases production costs and consumer prices.
So, what does this rise in inflation mean for consumers? Rising inflation can erode the purchasing power of consumers, leading to a decrease in their standard of living. Higher prices for everyday goods and services can strain household budgets, especially for those on fixed incomes. It can also lead to higher borrowing costs, as interest rates may rise in response to inflation.
In response to the surge in inflation, policymakers are closely monitoring the situation and considering various measures to address the inflationary pressures. Central banks may tighten monetary policy by raising interest rates or reducing asset purchases to curb inflation. Governments may also consider measures to address supply chain disruptions and energy prices.
In conclusion, the rise in inflation can be attributed to a combination of factors, including increased demand, supply chain disruptions, rising energy prices, loose monetary policies, and labor market dynamics. As policymakers work to address these challenges, consumers will need to navigate the impact of higher prices in their everyday lives.
The biggest reason of inflation is mortgage, loans and credits. It is a cancer for our society. Mortgage creates artificial supply shortage. People are buying something, for what they don't have money right now. Banks make money from money and that is extremely harmful for economy! Where in a healthy economy, companies make money by producing a product. Apart from that, because of the mortgage housing prices went up (this is historical fact), and through the chain everything else. When rent goes up, employers must increase salary for employees, otherwise they will move out, then employer has to increase the price of the product that he produces. Then, people who are buying those products with increased prices will ask employer to increase their salary and that ends up into infinity loop with constant inflation. The interesting thing that the Federal Reserve is aware of that and therefore increased the mortgage rates to slow down inflation. The question here is, if the Federal Reserve is aware about the harm of mortgage/loan/credit why it is still allowed to take it?
The United States (and almost all other countries) experience economic cycles of boom and bust. These cycles have averaged 18-21 years going back several centuries. When the cycle reaches the point of maximum inflationary stress an economy crashes. The most important cause of inflation, the cause of the cyclical crashes, is largely ignored. This is operation the nations land markets, that is the markets for land in towns and cities, land used in agriculture, land that contains all manner of natural resources, and land that is not normally thought of as land. These are natural assets such as frequencies on the broadcast spectrum, the paths around the earth taken up by satellites, or take-off and landing slots at airports. All of these assets have an inelastic supply. The markets for these natural assets with an inelastic supply attract speculative investment and hoarding.
Here are the economics that make our land markets the culprit. Every parcel or tract of land or natural asset has some potential annual rental value. This rental value is not produced by those who control the asset; it is generated by aggregate societal investment in public goods and services. This rental value needs to be publicly collected. Most of it is not. Most of it is privately taken, capitalized into higher and higher selling prices for land and natural assets. Essentially, those in our society who produce goods and provide services are required to pay non-producing rentier interests in order to access what nature provides.
Think of what happens to the price of residential property. Prices tend to keep climbing until they are no longer affordable. Things start to fall apart. Unemployment increases. Recession deepens. Property prices crash. Government begins to intervene and eventually the credit-fueled and speculation-driven property markets begin to inflate once again. But, understand that what is climbing and crashing are not HOUSING prices but LAND prices. Housing is a depreciating asset, an asset that requires constant expenditure of money for maintenance. Then, every decade or so, the house's systems have to be replaced. Does it make any sense that local communities financially penalize people for maintaining their house? The optimum rate of taxation on housing (at least up to a value below mansions) is ZERO.
What economics teaches us clearly is that if we tame our land markets we will essentially tame inflation. And, by doing so, we will tame the economic cycle.
Edward J. Dodson, M.L.A.
Director
School of Cooperative Individualism
http://www.cooperative-individualism.org
Inflation does stem from just one thing – poor leadership.
Pure propaganda. Inflation is cause by governments printing money. That’s it. That’s all. End of story. Anything else is a lie.
bull! the gov's been pumping $$$$ into the machine and keeping interest rates super low. now, as they stop the party's over and the machine s gone wacky. expecting a collapse as in 2008. that was their fault also
Government printing money causes Inflation. Nothing else. I just saved you from this silly state media video propaganda.
Whos pay is going up?
Mother nature eh….Ukraine…uh huh…couldnt have anything to do with spending $6 T on liberal boon doggle theft, and destroying the energy sector of the usa.
There are two causes of inflation; Joe Biden and the Democrat party.
Thank Joe Biden
Biden
Bitcoin solves this.
If only Putin never invaded Ukraine we would have never had high gas prices and inflation in the first place!! (eye rolls) lmfao!
Ignores completely that corporate profits are setting records due to companies raising prices well beyond their increased supply gain costs. Amazon even announced a doubling of white collar pay rates while fighting decent working conditions for their warehouse workers. Inflation and tying interest rates to employment are tools used against the working class poor and the current threat of a new labor movement. Your 'experts' are neocon shills for investment bankers.
Our idiot politicians spent nearly $12 trillion in 18 months with no plan on how to pay it back. That’s why the value of the dollar is collapsing. Too much money flowing all over the globe.
Money printer go BRRRRRRRR that's why. To those people saying coporate greed, its not like they just started being greedy. they are a business and will try to make as much money as they can, they are not a charity
Reason #1 – Joe Biden.
Two multi trillion dollar bailouts for Boomers and Gen X in 2008 and 2020 destroyed the dollar. Hyperinflation coming up! The government says inflation is at 8%, no way! It's at least 20%. The government has every reason to lie about how bad its gotten to prevent riots and revolution
That's an easy question. Two words. Joe Biden
The govt is to blame
Since Jan 2021 to today: natural gas has gone up 3X. Not 50% but 300%!!!! Gasoline prices have gone up 2X. My city to be "green" has switched to natural gas for everything except a sliver for solar and wind which cost more than natural gas. Natural gas has gone up 3X under Biden. President Biden is the WORST President in US history. How on Earth does he have an approval rate of 40% or even 33%?????!!!!!????
Brandon is causing inflation
It's not what is causing inflation but who. The answer is our president. If it gets too bad the left will just burn down a few more cities.
It's pretty stupid that the media keeps confusing Price Appreciation with Inflation. Price appreciation (higher prices) is a result of Central Bank Inflation by flooding the private banks with monopoly money out of thin air. The more money there is, the more it takes to buy stuff. The only reason they can do it is because our government keeps selling bonds (going into debt) to anyone with money, including the Chinese Government which owns over a Trillion dollars in American T-Bonds. Bonds are like loans, because the government gives you a certificate when you buy one so you can get paid a percentage in interest, until the bond ends and the government has to pay your money back. T-Bonds are a type of government bond that expire after less than a year, so if China decides to stop buying them, our government will be forced to default on the bonds that everyone else bought. Then nobody will trust buying American Bonds, and our money will be worth less than toilet paper.
you know what's causing it? democrats the very people you're defending
This propaganda is insane.
Educated people understand that inflation is hitting the entire world hard right now. Not just the United States. Biden had a plan and tried to pass it, but the Republicans and two Democrats thwarted his plan in order to sit back now and point the finger. Foolish Americans including these reporters overlook the obvious and the truth of these facts and now blame Biden as well. Wake up people, can’t you see that the Republicans would rather F you all in order to get Biden and make things right? What does that say about them and those who vote for them? It’s a kamikaze attack, but these rich congressmen and women are not feeling the pain, they got rich off of all of you suckers, just like the rich and powerful people that they support.
Biden, the worse President in history!
Notice he said nothing about how corporations are price gouging when they've enjoyed record profits during this pandemic but corporate greed goes unchecked.