Introduction
Beyond Numbers is a new Bureau of Labor Statistics publication that explores how inflation affects the economy. The publication “Exploring price increase in 2021 and previous periods of inflation” studies price increases by 2021, including information on the previous periods of inflation (Bennion et al., 2022). In addition, it describes how price inflation impacted wages, employment, and other measures of economic well-being.
Discussion
The article shows how inflation affected the prices of goods and services in the United States in the past, present, and future. The article states that inflation measures the rate of change in the cost of living. It is a significant issue for consumers, businesses, and governments. Inflation is generally higher than the economic growth rate (Bennion et al., 2022). Moreover, it can harm the economy, as well as personal finances. The Federal Reserve does not target inflation directly but aims at core inflation, excluding food and energy prices from its calculations.
The article discusses how inflation affected prices in 2021 and previous periods of inflation. It helps scientists understand how important inflation is as a factor in our economy. The research gives people insight into what will happen if they do not control their spending habits and make sure they buy affordable things for their budgets. The article mentions how one should budget their money so they can afford expensive items even if the prices go up. Handling emergencies and unforeseen expenses require individuals to save money and stay updated on the long-term effects.
According to the United States Bureau of Labor Statistics, the price index for consumer goods and services increased at an annual rate of 1.3 percent in the third quarter of 2019. The price index is the ratio of prices to a base year (Bennion et al., 2022). The base year is either the beginning, middle, or end of a period that the statistician has chosen as appropriate. In this case, the base year was March 2000, which means that inflation was calculated using data from March 2000 through December 2018. The price index measures inflation by comparing current prices with those in an earlier time (usually a year). As such, it can be used to track whether prices are rising or falling over time. It also allows researchers to compare changes between different types of products and services against each other.
Conclusion
In conclusion, a number discusses several essential aspects of inflation for policymakers to consider when deciding how to address inflation. For instance, the relationship between inflation and productivity growth has been a central monetary and fiscal policy issue. In addition, inflation reduces the actual value of debt instruments, such as bonds, and thus pushes up interest rates. Conversely, rising prices reduce debt instruments’ real value, lowering interest rates. Thus, the impact of inflation on wages, employment, and other measures of economic well-being depends on how rapidly prices change in response to economic conditions (Greenlaw & Shapiro, 2022).
Inflation can also affect household budgets in high-income families differently than those in low-income families). According to the article, the inflation rate in the United States has been relatively stable over the past few years, but this could change in 2021. Core inflation has been slowly rising since mid-2019, when it was 3 percent (Bennion et al., 2022). It makes 2021 look like an opportune time for inflation to rise again because many goods and services are more expensive than they were three years ago.
Reference
Bennion, E., Bergqvist, T., Camp, M. K., Kowal, J., Mead, D. (2022). Exploring price increase in 2021 and previous periods of inflation. Beyond the Numbers: Prices & Spending, 11(7). Web.
Greenlaw, S. A. & Shapiro, D. (2022). Principles of Macroeconomics 2e. OpenStax.