How worried should we be about inflation?
Economist explains why inflation seems worse in Midwest
WICHITA, Kan. (KWCH) - Plenty of talk about high inflation and the worries that go with it, but what’s causing it and is there an end in sight?
Inflation. It’s too many letters to be called a four letter word, but it might as well be as Americans watch more of their hard earned money flow out of their hands into cash registers. Economist Jeremy Hill knows all about it.
“When you go to the grocery store, you can see it in real life when you go and buy stuff you can see something is happening that’s making stuff more expensive,” Hill said.
About seven percent more expensive...at least as a whole. That’s the inflation percentage being felt nationwide. The question is why?
“There’s some fundamentals of the economy that makes things expensive and the biggest one that made all things go up is the cost of energy,” Hill explained “Particularly here in the Midwest because we stopped producing oil. It got more expensive to drive those trucks into these markets.”
So, the cost of energy increased. Which means it costs more to ship things we buy, shipping the things that go into making the things we buy, shipping the things that go into growing the things we eat. You get it. In fact, when we talk about that seven percent increase we’re actually talking about the consumer price index. There’s another thing called the producer price index. The people most concerned about that one are the people who make the things we buy. Hill says that has increased more than 20 percent.
“Companies are seeing big inflation but not all of that has actually trickled down to households. Only a little bit has gotten down to us,” he said.
There’s also the pandemic that led to supply chain issues, closed shipping ports, microchip shortages. It all adds up.Bad news first, food prices are expected to stay high for the next year, and the Midwest has experienced low levels of inflation in recent years past because we produced so much energy. It kept cost of living lower than many other parts of the country. Since we stopped producing oil, we’re actually feeling this seven percent increase more than other areas of the country.
Now the good news, Hill says energy costs are always changing. he says that’s normal, and he believes they will level off, while Covid effects will eventually peter out too.
Hill says low to middle income households are being hit the hardest by inflation and says his best advice is to make sure you’re not spending beyond your means and that you’re trying to save as much as you can.
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