Here’s why consumer goods are so expensive.
Nowadays, many people bemoan the fact that life has become so expensive. Gas costs more. Grocery prices are on the rise. And forget about those vacation bargains; this year, many people will have the chance to get their hands on the things they want, and they will most likely pay a premium for it.
In October, the consumer price index rose 6.2% on an annual basis (meaning the cost of consumer goods rose 6.2% from the previous year). So what is causing such skyrocketing inflation? There are a few factors that combine to create a scenario that wreaks havoc on consumer finances.
Low supply and high demand
If you have taken any Economics 101 courses before, you might recall the relationship between supply and demand, which is when there is not enough supply of a given product to everyone, demand is increasing, as are prices. This is what has happened in recent months.
During the pandemic, a number of key supply chains were disrupted or closed. Today these supply chains are trying to restart, but it is not happening fast enough.
Meanwhile, the economy has come a long way from where it was a year ago. Currently unemployment is lower and jobs are plentiful. Consumers have more money to spend – and they can’t wait to spend it. But since there is not enough supply to meet consumer demand, prices have increased.
The interesting thing about inflation is that it’s easy to think of it as an indicator of a poor economy. But in reality, inflation is often a sign of a healthy economy. If there was less demand for the products, prices would not increase as much. And so, while most of us won’t be celebrating inflation, it’s actually a sign that our full economic recovery might be closer.
How to fight inflation
Times of inflation can be damaging to individual finances, and that may be what is happening now. If you’re struggling to keep up with the rising cost of living, there are a few things you can do to make your life easier.
First of all, be on a tight budget. Calculate exactly how much money you need to spend for the most part given today’s higher costs, and it’s only after you factor in these expenses that you need to allocate the money. to non-essentials, such as entertainment.
Next, consider increasing your income with a side business. There are many gigs that will allow you to fill your savings account and collect more pocket money.
Finally, be smart about the use of credit cards. There are many cards that offer generous rewards and cash back for daily purchases. Research your options and sign up for a card that will put more money in your pocket for essentials like gas and groceries.
Better yet, find a credit card with a signup bonus that has a spending threshold you’re likely to be eligible for. For example, if you qualify for an offer that will reward you with $ 200 in bonus cash for spending $ 1,500 within three months of opening your card, this is a deal worth pursuing. , especially if you normally charge spending $ 500 or more on a credit card each month.
Unfortunately, high levels of inflation can be with us for a while. Do your best to maintain your purchasing power and avoid debt until the going gets tough.