2022 Inflation Crisis
When you look back at inflation historically, 1991 was the last time inflation had the amount of increase that it currently has in 2022. Let’s start be defining inflation. Inflation is the increase in the price of goods and/or services. It is also the devaluation of your purchasing power through a lower dollar. Watch the video below to learn more about the 2022 inflation crisis.
Inflation Predictions for 2022
Many people thought the inflation we saw in 2022 was temporary, and that by 2022, inflation would resume back to around 2%. 2% is the government’s target. However, now analysts expect inflation to stay around 7% through the remainder of 2022. By 2023, the analysts see inflation going back down to around 2%, and thus the 2022 inflation crisis would finally subside.
What causes inflation?
This period of inflation in 2021-2022 is caused by a strong demand for products. A large number of people who did not spend money in 2020 and 2021 are now looking for goods and services that are not in great supply. Those supply issues are mostly due to shutdowns in 2020 because of COVID-19.
How do we measure inflation?
The government runs a consumer price index which is a survey of households across the US so see what they are spending on goods and services directly. That survey over the past year has shown a 7% increase. However, if you remove energy and food from that calculation, it was up 5.5%.