Understanding inflation

Inflation is a complex issue with no single cause. There are numerous theories on the causes of the most recent period of inflation. In today’s ‘point the finger of blame’ society, there just has to be someone that caused every bad event. Inflation is either caused by the president, a political party, government spending or price gouging by manufacturers or distributors or some combination of those factors.

While politicians and the media sound alarms that inflation or recession are disastrous, a fact of basic economics is that periods of inflation and recession are normal cycles in a free market society. When consumers buy more and spend faster than the markets can supply, inflation occurs.

Coming out of a mild recession due mainly to a lack of consumer spending during the COVID-19 pandemic, a period of inflation was predictable. Consumer spending increased, the demand for goods exceeded availability and the ability to supply them. When manufacturers and suppliers see sales increase, they see a way to increase profits and raise prices and this leads to inflation.

Periods of inflation and recession are hard to live through but they will happen no matter which political party is running the government. Keep this in mind when you vote in the upcoming election.

Ron Scherer

Antioch