What to know about the inflation surge and how it will affect Charlotte residents
Inflation in the U.S. rose by 8.5% since last year, according to the Consumer Price Index. The figure is the highest 12-month increase since December of 1981.
The inflation surge is being steered by the cost of energy and food, both of which have been affected by supply shortages and an increase in consumer demand. Prices for daily goods, including gas, have been on the rise everywhere in the months leading up to March, and Charlotteans have already seen such surges in their everyday lives since the beginning of the year.
Nonetheless, inflation is still a difficult concept to grasp for many. It’s a complicated subject that somehow seems to go unnoticed by some while proving to be unbearable for others. So, what is “inflation” and how will it affect North Carolinians?
What is inflation? What is causing it?
Inflation can be defined as a loss of purchasing power over time, according to Investopedia investor expert Jason Fernando. This means when inflation occurs, your dollar won’t be able to buy you as much as it could previously.
Inflation is measured in a number of ways, but the main gauge of inflation rates is the Consumer Price Index (CPI). The CPI measures and keeps track of the prices of items that consumers typically buy with out-of-pocket funds.
According to The Labor Department, the CPI rose at an abnormally high rate in what the Wall Street Journal reports as an “unrelenting” six months of rising prices that range anywhere from 4% to 6% higher than what the Federal Reserve projected.
Who is affected by rising inflation?
Companies that aren’t allowed to price their own products will take a hit to their profits since the cost of many items is increasing and such costs cannot be passed on to consumers. Companies that do price their own products, however, will swiftly allow the inflation surge to be reflected in the cost of their goods.
Charlotte residents can expect to see a rise in the cost of day-to-day essentials like food, housing expenses, and gas. As a result, lower-income households will bear the brunt of rising costs.
Across the economy, the year-over-year price spikes were widespread. Gasoline prices rocketed 48% in the past 12 months. Used car prices have soared 35%, though they actually fell in February and March. Bedroom furniture is up 14.7%, men’s suits and coats 14.5%. Grocery prices have jumped 10%, including 18% increases for both bacon and oranges.
According to CPI data, low-income households are forced to spend a considerable amount of their income on essential goods. This means that while it may not yet be severely impacting high-income families or well-earning individuals, inflation has already put a financial strain on the poorest in Charlotte.
How did we get here?
In the years leading up to this point, inflation had been held at a steady rate. However, as the global economy attempted to recover from the financial stress brought about by the pandemic, companies were met, unexpectedly, with a rapid increase in demand for goods and services, The Associated Press reported.
The supercharged economic recovery sent suppliers spiraling as they attempted to meet the needs of consumers, ultimately leading to delays in shipping and a surge in product pricing. Since then, inflation has been on a steady incline up until the last few months.
The war in Ukraine, rising gas prices, China going back into lockdown, growth in wages, and the continuing “Great Resignation,” have all recently piled onto one another to create what Mark Zandi, a chief economist at Moody’s Analytics, calls “a perfect storm.”
“Russian invasion, surging oil prices, China locking down, further disruptions to supply chains, wage growth accelerating, unfilled positions. Just a kind of scrambled mess leading to painfully high inflation,” Zandi told CNBC. “It would be hard to imagine we didn’t suffer higher inflation.”
This story was originally published April 13, 2022 at 8:58 AM.
