Consumer Prices Surged in October. When Will Inflation Stop?
Consumers are struggling as inflation continues to rear its ugly head.
- The Consumer Price Index, a measure of the cost of goods, rose 0.9% in October.
- On a year-over-year basis, consumer prices are up 6.2%.
Consumers have been getting squeezed by inflation for months, resulting in higher costs at the pump, the supermarket, and just about everywhere. Recent data from the U.S. Bureau of Labor Statistics confirms just how rapidly the cost of living is rising.
In October, the Consumer Price Index, which measures the cost of common goods, rose 0.9% from September. But on a year-over-year basis, the index is up 6.2%.
Why are prices rising so high?
A big reason consumer prices are so high boils down to the laws of supply and demand. Many consumers are spending more now than what they were earlier in the pandemic, and so the demand for goods is high. Meanwhile, supply chain issues are causing a shortage of products. Anytime consumer demand exceeds supply, prices are apt to rise.
Adding to the pain in October was the fact that energy costs rose 4.8% from just a month prior. They're now up 30% from this time a year ago.
Will lawmakers step in?
Since the start of the pandemic, lawmakers have sent three rounds of stimulus checks into Americans' bank accounts in an attempt to promote spending and propel an economic recovery. Now, the problem isn't that consumers aren't spending. It's not that they don't want to spend, but everything is costing more.
In October, the national unemployment rate dropped to its lowest level since the start of the pandemic, and job creation soared. In light of that, we're unlikely to see another round of stimulus checks anytime soon.
Thankfully, some Americans are still getting extra money in the form of the boosted Child Tax Credit. Payments under that credit are being sent monthly through the end of the year and are set to arrive on Nov. 15 and Dec. 15. But those without children may not have any extra near-term aid to look forward to.
How to combat inflation
Consumers feeling the impact of inflation can take steps to fight back. For one thing, those with the option to cut back on discretionary spending could do so to conserve cash for necessities. That could mean dining out less frequently and canceling gym memberships or other luxuries.
Getting a side hustle is another great way to maintain buying power during periods of inflation. Those who take on a second job can boost their total earnings substantially and not only score more cash for everyday expenses, but also, for savings.
Meanwhile, taking advantage of credit card rewards could help some consumers offset their higher costs. For some, upgrading to cards with more generous cash back offers on everyday expenses like gas and groceries could make sense.
When will prices start to come down?
Once supply chain hiccups begin to resolve and there's enough product to meet demand, prices should start to drop across the board, making it easier for consumers to keep up. But that may not happen for a number of months, and so it's fair to assume that rampant inflation could be here to stay until well into 2022.
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