Inflation outpacing pay, hurting average Americans
STEVENS POINT, Wis. (WSAW) - A 40-year record inflation rate means people are feeling the pinch when it comes to daily expenses.
“Obviously people have to eat, and for the most part, people have to travel at least for your job you have to spend money on fuel,” said UW Stevens Point’s Chief Analyst for the Center for Business and Economic Insight Kevin Bahr.
The U.S. hasn’t seen this kind of jump in prices of everything from food to cars to lumber since the 1980s.
“The most recent data from the United States government is that inflation hit 9 percent in the last month,” Bahr said. “Number one it’s taking a bigger chunk out of your paycheck and number two, your wage is probably not going up as much as higher income brackets.”
Just last week, the Federal Reserve raised interest rates again in an attempt to slow the progression of inflation. The idea is that if it’s more expensive to borrow money, consumer demand will go down, but that only works on big-ticket items like cars and homes.
Further complicating things, supply-chain issues and the war in Ukraine are having an impact in prices worldwide.
“The Federal Reserve can try to temper consumer demand and bring down some prices, but there are some things that affect pricing that the Federal reserve can’t control too much,” Bahr said.
Oil prices are up 50 percent since Russia invaded Ukraine, and with gas prices soaring, shipping costs are also through the roof.
“A lot of it’s related to energy. Energy’s gone up about 40 percent over the last year,” Bahr said.
Since countries’ economies are so connected in the modern world, any upset affects everyone.
“It’s a global market, we’re all getting impacted kind of by similar global factors, and those are the kinds of things the Federal Reserve really can’t do that much about,” Bahr said.
According to Bahr, inflation is about 8 percent in Canada and anywhere from six to 20 percent in Europe.
Copyright 2022 WSAW. All rights reserved.