Significant price increases have affected used cars, medical care, appliances, energy, food and cigarettes in recent months, according to government data. Gas prices headed higher on Monday — and could soon reach their highest retail level since 2014 — after a cyberattack forced the indefinite closure of the nation’s largest fuel pipeline.
…To date, the increase in inflation remains modest. Comparing current prices to those one year ago also overstates what’s actually in the economy. During the pandemic’s first months, many prices — including for hotel rooms, airplane tickets and men’s suits — collapsed. So year-over-year comparisons exaggerate the degree of change. Such distortions will become less significant over the remainder of this year.
The recent uptick in prices comes after decades of generally quiescent inflation. On an annual basis, the consumer price index has not been above 6 percent since the early 1990s.
It could be that the inflation we’re seeing is transitory, and we’ll get back to supply/demand equilibrium as various parts of the economy (computer chips, timber, etc.) get back online.
On the other hand, hundreds of billions more dollars into the economy as part of Biden’s infrastructure plan. While I believe this is money well-spent, this would seem a really bad time for it. Already, money has nowhere to go, forcing a run-up in housing and stocks, to say nothing of crypto currencies and Non-Fungible Assets.
The divide between rich and poor has been made even more pronounced by the pandemic. For those who have money, they now have a lot of it. When the supply side isn’t there, inflation is what you get.