Americans are really feeling the impacts of inflation. From the increase in grocery prices to the steep and ongoing rise of gas prices, there is no relief on the horizon yet.
In March of this year, the Labor Department reported that consumer prices had risen by 7.5% last month compared to a year ago which turns out to be the steepest yearly increase since 1982.
There continues to be a shortage of workers and supplies, lots of federal aid, very low interest rates and strong consumer spending which all combine to propel inflation in the past year. This is the worst inflation many people born after the early 1980s have ever seen. The increase in prices is caused by multiple factors and just not one thing, akin to a perfect storm. Much of it is because of the global pandemic and some of it caused by global, geopolitical actions. And inflation is also a problem in almost every country.
But the prices today are not as nearly bad at those in the 1970s and 1980s. Then, double-digit price increases were common. The inflation rate reached 12.2% in late 1974 soon after Gerald Ford took office which is much higher than today’s 7.5%.
One of the drivers for inflation in the 1970s and 1980s was oil. America is much less dependent on oil as then. Only 1% of electricity generation uses oil today as fuel, compared to a much higher rate during the oil shock days. And fuel-efficient cars means Americans spend far less on oil than they used to do.
Vox News reported that Fed Chair Jerome Powell warned “that supply side constraints have gotten worse” over the course of the pandemic, while the supply chain and economic risks are ”clearly now to longer and more-persistent bottlenecks, and thus to higher inflation”.
A shortage of semiconductors has caused used-car prices to skyrocket over 37%. And furniture prices have spiked 14% higher. Wheat prices are also supposed to rise and the commodity will be less available because almost 30% of the world’s wheat is exported from Russia and Ukraine.