Why It’s Not Time To Freak Out About Inflation Yet

Why It’s Not Time To Freak Out About Inflation Yet

As prices rise and each dollar buys fewer overall goods and services, it’s clear inflation is increasing. You see it at the grocery store and gas pump. The cost of beef was up 9.6 percent in 2020, while chicken was up 5.6 percent. Gas prices have risen since late 2020, driven by higher oil prices.

Already in 2021, lumber prices are up over 80 percent — trees have stayed cheap, but sawmills are unable to keep up with surging demand chasing a limited amount of sawmill production capacity. Of course, if your income doesn’t keep pace with all this, you have less purchasing power.

The cause of the inflation centers on reopening, stimulus, and base effects. First, when the economy shut down, oil prices crashed. As we reopened, oil prices have recovered, now around $60 per barrel. Because energy prices are a significant driver of overall prices in an economy, and energy consumption makes up a good portion of

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