Inflation, a word that I can ensure you have heard some time in recent years. But, have you ever really thought about inflation? Recently, you might have noticed an increase in normal purchases, ranging from gas to your favorite snack, the price increase is due to inflation. Inflation is when prices of an economy often rise due to a specific event. Speaking of modern-day, inflation prices have spiked due to the recent outbreak of COVID-19. The economic shift within the past few years has changed the value of a large variety of markets within the United States. 
Specifically, gas and oil markets were hit the most by inflation. According to CNBC in 2022, gas prices were increased by over 50%. This was a huge market to shift as people often use gas and oil every day. This market shift is leading to consumers choosing to redistribute their money elsewhere. Many Americans are choosing to dine out less and spend less money on leisure activities due to the spike in inflation. This causes a chain reaction as small businesses and restaurants are also being affected by inflation, they are forced to raise their prices while receiving fewer customers due to this market shift.
According to CNBC, budgeting became a massive part of 2021 due to the increase in inflation. As seen in the chart, many Americans are budgeting their income more to fulfill specific needs leading to a decrease in happiness. While inflation specifically touches huge markets such as oil and gas, the lasting chain effect leads to Americans needing to change their lifestyle.
Budgeting is an increased strategy that followed inflation. However, Americans choosing to budget more is a positive effect of inflation. Budgeting can often help one spend their money wisely. Whether it’s simple grocery shopping or important bills such as tuition or rent, budgeting can help make your life easier by keeping track of how much you spend.
This is what increased during the increase in inflation, people were keeping an eye on the amount of money they spent and cut back on different spendings ultimately leading to a stronger budget. Americans cutting back on purchases that are not deemed important helps them in the long run.
Ultimately, it’s hard to predict what path inflation will take. Being 2023, different government officials and the president are trying different tactics to bring the economic market to peace. However, it’s not as easy as it sounds. Keep an eye out on the news and different articles to follow along this “inflation journey”.
I wrote about inflation on my blog post this week! I don’t think the increase in inflation could’ve been stopped because the government had to supply stimulus checks during Covid, which increased the amount of money in circulation. It is good to see that inflation is cooling down, but it is effecting American consumers through higher interest rates. On Wednesday the Fed held a meeting and said interest rates would be kept steady in between 5.25% and 5.5% to continue fighting inflation. I have seen the effects of inflation on small businesses, since my family owns a DQ. We’ve had to increase prices, and customers aren’t happy. Our distributor has increased prices, and consequentially the burden has fell on the consumer. It will be interesting to see what the Fed will say about interest rates in their March meeting, and how they continue to fight inflation.
This was a very good article on the rise of inflation and the risks it may pose to our future. I find it interesting how most people responded, as I think an increase in budgeting is never a bad thing and should be encouraged more. Frivolous spending is a problem many people – especially Americans – often have, and even if inflation is a far bigger problem overall, I don’t necessarily think it’s a bad thing. It has encouraged people to be smarter about the money they spend – which can only help them in the long run.
Inflation has been something that I have only ever gained a basic grasp of. I hadn’t really delved deeper into its more social and behavioral changes it can incite in the economic behavior of a society. I though that the relationship between the larger increase in gas and oil prices were able to dissuade people from using their cars. I wonder if it had any significant impact on greenhouse emissions. It’s interesting how changing pricing on something can cause such a wide scale shift.