Increased Inflation

in the U.S

By: Jillian Snell | Period 7

What is Inflation?
● Inflation is when the cost of services and goods in the economy increase over a sustained
period of time.
● Measured by the consumer price index (CPI) and reported by the Bureau of labor
Statistics (BLS), inflation rate is an important economic indicator, as it shows how quickly
prices are changing.
● In 2022, especially in March, inflations rates have been increasing in the U.S
What Causes Inflation?

● The cause of inflation can be broken down into 2 categories, cost push
and demand pull
● Cost push: inflation caused by an increase in the price of inputs due to
the shortage of cost of production, which leads to a decrease in the
supply of outputs.
● Demand pull: caused when the aggregate demand increases at a faster
rate than the aggregate supply.
● Both result in an increase in prices.
Increasing Inflation in the U.S
● The U.S inflation rate increased 1.2% in March which pushed the
year-over-year inflation to 8.5%. That is the highest rate it’s been in 40
years.
● Food, transportation, shelter, medical services and apparel have also
gone up in March. (Food has gone up 8.8%)
● For example, used car sales prices have increased an astonishing 35.2%.
● Gas prices also spiked up 18.3% in March.
 How Does Inflation Affect You?

● When the current rate of inflation

grows higher and higher, you pay more
for items.
○ Ex. The war between Russia and
Ukraine rose the gas prices that
were already inflated, making
matters worse.
● When inflation reaches an unhealthy
rate, investors and business also begin
to worry because of increased cost for
supply, services, etc.
● Inflation can also affect paycheck
factors, the housing market, etc.
The Future

● As of right now, inflation is expected to average 5.5% in the end of

2022.
● Around 2% is the healthy inflation rate, and it is estimated that in the
middle of 2023, inflation will go back down to that healthy rate.
● However, with Russia’s invasion of Ukraine, it is hard to tell what
exactly will happen with inflation.
Discussion Questions

● Do you think inflation will go back down or increase more?

● Have you recently experienced inflation in the things you buy?

Sources

https://keydifferences.com/difference-between-demand-pull-and-cost-push-inflation.html

https://tradingeconomics.com/united-states/inflation-cpi

https://www.thebalance.com/current-u-s-inflation-rate-statistics-and-news-3306139

https://www.bankrate.com/banking/federal-reserve/what-is-inflation/#1

https://www.investopedia.com/articles/personal-finance/081514/how-inflation-affects-your-cost-living.asp

https://www.fanniemae.com/research-and-insights/forecast/inflation-rate-signals-tighter-monetary-policy-and-threatens-
soft-landing