Inflation Surges: Are America’s Wallets in Trouble?
Prices in Los Angeles and across America are rising, with a 0.5% increase in the CPI for January, marking a significant inflation spike in eighteen months. The surge in inflation…
Economic inflation refers to the sustained increase in the general price level of goods and services in an economy over a period of time. It indicates a decrease in the purchasing power of money, meaning that as prices rise, each unit of currency buys fewer goods and services. Inflation is typically measured using indices such as the Consumer Price Index (CPI) or the Producer Price Index (PPI).
Inflation can result from various factors, including demand-pull inflation (when demand for goods and services exceeds supply), cost-push inflation (when the costs of production increase, leading to higher prices), and built-in inflation (when businesses increase wages to keep up with rising costs, which can further increase prices).
High inflation can erode savings and reduce consumers’ purchasing power, leading to economic instability. Conversely, moderate inflation is often seen as a sign of a growing economy. Central banks, like the Federal Reserve in the United States, monitor inflation and may adjust interest rates to control its rate, aiming to keep it at a target level that supports economic growth while avoiding excessive inflation or deflation.
Prices in Los Angeles and across America are rising, with a 0.5% increase in the CPI for January, marking a significant inflation spike in eighteen months. The surge in inflation…