Inflation Has Arrived. Here Are Four Things You Need to Know.

What is inflation, why is it up and whom does it hurt? A run through common questions about the ongoing price burst.

Have you noticed the price of gas to fill your tank has risen?

Or, have you noticed the price of your groceries have gone up?

The price of everything has risen, have you noticed this?

What is inflation you ask?

The latest cause of inflation was caused by people sitting at home and rightly so not working because of COVID and the pandemic. Then, with vaccinations arriving on the scene and business’ opening back up, Americans are doing what they do best: shopping. The resulting increase in spending has been good for stimulating the economy, but more demand typically results in higher prices.

In the US, the inflation syndrome is often described as “too many dollars chasing too few goods;” in other words, as spending outpaces the production of goods and services, the supply of dollars in an economy exceeds the amount needed for financial transactions. The result is that the purchasing power of a dollar declines.

Inflation is tied to “supply and demand.” When Americans spend a lot of money and goods become scarce, then prices go up. But this is not always the case, circumstances such as pandemics can have an effect on the economy.

The US economy is also experiencing significant supply chain problems tied to the COVID-19 pandemic. This is driving up the cost of production and reducing the supply of goods, also pushing up prices.

The supply-chain bottlenecks — around the world — have caused record shortages of many products that American consumers are used to having readily available, from household goods to electronics to automobiles.

For consumers, higher prices on essential goods like food and gasoline may become unaffordable for people whose paychecks aren’t rising as much. But even when their wages are rising, higher inflation makes it harder for consumers to tell if a particular good is getting more expensive relative to other goods, or just in line with the average price increase. This…