Inflation Moderating Provides Hope For Rates

February 14, 2023
Inflation Moderating Provides Hope For Rates
War, labor shortages, and more: what’s propping up inflation.

 

Inflation in 2023 continues to sting but in some cases has showed signs of slowing in recent numbers likely due to factors mitigated by the Federal Reserve rate hikes. As reported by WalletHub, inflation was still a “whopping” 6.5% in December 2022, to close out the year. In addition, they said high inflation is driven by a variety of factors, including the ever-present COVID-19, the war in Ukraine, and ongoing labor shortages. “The government is hoping to continue to rein in inflation with additional aggressive interest rate hikes this year,” said Adam McCann, a WalletHub Financial Writer. “But exactly how much of an effect that will have remains to be seen.” When asked specifically about inflation, Robert Wyllie, Assistant Professor of Political Science at Ashland University said, “What now looks like peak inflation, the 9.1% CPI we saw in June, was initially driven by higher prices in the goods sector, for example, the jump in prices of new and used cars. Demand rotated away from services and into commodities during the pandemic lockdowns, which is why so many economists one year ago thought higher goods prices represented transitory inflation, which would disappear once services reopened and supply-chain bottlenecks cleared. Now, however, the service sector is also contributing to still-high and clearly persistent inflation. Excess savings, probably exacerbated by the third-round stimulus checks from the end of 2021, contributes to this, as well as other factors like higher energy costs.” 

Source: MReport