Prices in America are shockingly high and they are not showing signs of dropping any time soon. The consumer price index and the personal consumption expenditure index are two measures of inflation, and in November (the last time data was collected), they were both higher than they have been in 40 years with prices rising 7% more in November 2021 than they did in November of 2020. Inflation is a simple yet nuanced issue that can have a drastic impact on countries, and while it is not extreme in America yet, it has forced action from the White House and is having impacts on the day to day life of Americans.
Inflation describes rising prices devaluing the currency of a particular nation. When prices among all products increase at a significant rate, each unit of currency can buy fewer things, and, therefore, money has less value. As prices rise, the purchasing power of money decreases (each dollar has less value relative to what it can buy). Throughout history, serious cases of inflation have undermined the stability of nations as shown by Germany following World War I. Prices for basic items such as tea and eggs skyrocketed to 30 or 40 times their price before the war. While we are nowhere close to experiencing effects that significant in America, 1920s Germany shows what can happen when inflation rises unchecked.
“While prices can rise quickly, wages don’t increase as fast,” said former San Marcos Economics teacher Mrs. Willbanks. “People can’t purchase as much, and in general, they will feel more poor.”
A serious contributor to inflation over the past year has been the COVID-19 pandemic. It has affected supply chains making it difficult for stores to fill their shelves as the demand for these products remains unchanged. Stores and companies are faced with no other choice but to increase their prices to stay profitable. This rapid increase has been especially noticeable with gasoline prices which led to President Biden having to use the U.S. Oil Reserves in an attempt to increase the supply and lower prices.
“When most people hear about inflation they don’t often realize how it directly affects them,” said senior Sofia Wallace. “But when we find ourselves paying way more than usual for gas, boom, that’s inflation.”
Even as COVID cases decrease, supply chain issues and sustained demand for products will make it very difficult for prices to come down in the near future.
Unfortunately, there is not much that we can do as Americans to deal with this issue. All we can do is weather the storm and hope that prices return down to earth in the future. Prices are high, so being wary of what you are spending money on is as good of an idea now as it ever is. Buying less can also help prices go down, so being wary of if you need what you’re purchasing is also a good idea. We are living through a crazy and unpredictable period of history, and there is nothing we can do other than keep our heads down and keep moving forward.