This week, Craig Siminski, of CMS Retirement Income Planning, shares an article discussing some of the forces behind rising prices, the Fed’s plan to combat them, and early signs that inflation may be easing:
n March 2022, the Consumer Price Index for All Urban Consumers (CPI-U), the most common measure of inflation, rose at an annual rate of 8.5%, the highest level since December 1981.
It’s not surprising that a Gallup poll at the end of March found that one out of six Americans considers inflation to be the most important problem facing the United States.
When inflation began rising in the spring of 2021, many economists, including policymakers at the Federal Reserve, believed the increase would be transitory and subside over a period of months. One year later, inflation has proven to be more stubborn than expected. It may be helpful to look at some of the forces behind rising prices, the Fed’s plan to combat them, and early signs that inflation may be easing:
Hot Economy Meets Russia and China
The fundamental cause of rising inflation continues to be the growing pains of a rapidly opening economy — a combination of pent-up consumer demand, supply-chain slowdowns, and not enough workers to fill open jobs. Loose Federal Reserve monetary policies and billions of dollars in government stimulus helped prevent a deeper recession but added fuel to the fire when the economy reopened.
More recently, the Russian invasion of Ukraine has placed upward pressure on already high global fuel and food prices.3 At the same time, a COVID resurgence in China led to strict lockdowns that have closed factories and tightened already struggling…
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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 24 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.
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