Just as the pandemic stopped, its effect was still felt. One of these is the increase in prices leading to the increase in services. With this inflation, what are the reasons?
Consumer Price Index (CPI) data for the month of June, had been shown yesterday, with the inflation rate increase of 0.2% up to 3% year-over-year.
According to the report of Barchart, this was lower than the projected 3.1% and the lowest inflation rate since March 2021.
The prices of food and gas decreased also compared to what economists expected based on the data of the Bureau of Labor Statistics.
The major indexes of the United States hit the highest level as of April 2022 across the board. Based on the report of CME’s FedWatch Tool, the investors were now pricing in a 92.4% chance of a 25 base point rate going up with the Federal Reserves that met in July.
Reasons For Inflation Surge During Pandemic
- There was inflation because the government had to increase the supply to support economies that were worth trillions of dollars.
- There was a shortage of goods leading to higher prices because the supply chain had been disrupted by the pandemic.
- Just as when the pandemic was about to stop, demand for services was resumed but supply was so low. This led to an increase of higher service fees.
- The prices of energy commodities like oil also rise up.
- Businesses raise the prices of goods with the belief that inflation would still continue.
With the data given yesterday on the result of CPI, Americans were hoping that the inflation brought by the pandemic would eventually stop.