Prices for everything from apples to furniture to used cars is going up, reports Heather Brown (2:40).
WCCO 4 News At 10 – July 15, 2021…(read more)

LEARN ABOUT: Investing During Inflation

REVEALED: Best Investment During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing

Inflation is a term that gets thrown around a lot in economic discussions, but many people may not fully understand what it means and when it becomes a cause for concern. In simple terms, inflation refers to the general increase in prices of goods and services over time, leading to a decrease in the purchasing power of money. This means that the same amount of money can buy fewer goods and services as time goes on.

So, when should we start worrying about inflation? The answer is not always straightforward, as there are various factors that can impact the level of inflation and whether it becomes a cause for concern.

One factor that can contribute to inflation is excessive demand. When there is high demand for goods and services, companies may increase their prices to capitalize on the situation. This can lead to a rise in overall prices and, subsequently, inflation. This type of inflation, driven by demand, is generally seen as a sign of a healthy and growing economy. However, if demand becomes unsustainable and starts to outstrip supply, it can lead to a more worrying level of inflation.

Another factor that can contribute to inflation is rising production costs, such as higher wages or increased raw material prices. When companies face higher production costs, they may pass these costs on to consumers in the form of higher prices for goods and services. This type of inflation, known as cost-push inflation, can be a cause for concern as it can erode purchasing power and reduce consumer spending.

Central banks play a crucial role in monitoring and controlling inflation. They use various tools, such as interest rate adjustments and open market operations, to try to keep inflation within a certain target range. In many developed countries, central banks aim for an inflation rate of around 2% as this is seen as a manageable level that avoids the negative impacts of both high inflation (eroding purchasing power) and deflation (falling prices leading to stagnation).

So, when should we start worrying about inflation? In general, moderate and stable inflation is a sign of a healthy and growing economy. However, if inflation starts to accelerate and surpass the targeted levels, it can become a cause for concern. High and unpredictable inflation can lead to a reduction in purchasing power, increased uncertainty for businesses, and a decrease in consumer and investor confidence.

In conclusion, while a certain level of inflation is a normal part of a growing economy, excessive and unpredictable inflation can have negative impacts. Central banks play a crucial role in monitoring and controlling inflation levels, and it is important for policymakers and economists to keep a close eye on inflation indicators to ensure that the economy remains stable and healthy.