The problem of inflation occupies an important place in economic science since its indicators and socio-economic consequences play a serious role in assessing the financial security of a country and the world economy. According to the experts, the inflation rate in the United States is gradually decreasing due to gasoline cost reduction (“The United States Inflation Rate”). Inflation creates tremendous uncertainty in society and thereby causes a lot of anxiety. In conditions of high inflation, it is difficult to make business decisions, and even more difficult to make long-term investments.
The changes in inflation are the result of reduced aggregate demand for a wide range of goods. The most probable reason for low inflation is the COVID-19 outbreak, which forced the majority of the population to stay at home. The latter reduced the demand for transportation and other products, such as gasoline. The impact of the inflation on the United States’ economy will be manifested in economic stagnation due to decreased demand for certain goods. The U.S. is one of the major buyers of oil and other products from other nations, which means that with lower inflation, there will be less demand. Therefore, the world economy will experience some form of an economic slowdown.
Inflation is expressed primarily in the depreciation of money, which depreciates in relation to gold, commodities, and foreign currencies. The former is expressed in the increase in the market price of gold, and inflation to goods is manifested in the growth of commodity prices such as wholesale and retail. The company will inevitably suffer from reduced inflation because the demand is also reduced. In addition, money circulation is stagnant due to many industries experiencing some form of restrictions. The high unemployment rate will lower the purchasing power of consumers, which will result in the company’s lack of growth.
Work Cited
“United States Inflation Rate.” TradingEconomics, 2020, Web.