After rising throughout the pandemic, supermarket price hikes have fallen below 2%, but experts predict inflation may take time to diminish.
The epidemic caused a worker shortage, especially for front-line service workers, raising hourly pay. Since labor expenditures make up a large part of the cost of products and services, this raised consumer prices.
Wells Fargo managing director and senior economist Sarah House said pandemic-related supply chain problems have yet to fully resolve.
She noted that new car prices have risen 20% and used car prices 30% since the pandemic began. While their price rises have slowed, car part shortages and the loss of qualified technicians have raised vehicle prices.
American wages have hardly kept pace with price rises. Federal stimulus at the start of the pandemic gave individuals a monetary cushion during the worst of it, but there is a growing consensus that it drove prices up by providing people money to spend.
While raising interest rates to slow price growth, the Federal Reserve has tried to fight fire with fire. The central bank has tried to lower demand for goods and services by boosting borrowing costs, lowering price growth.
Many economists were surprised by inflation. The consensus prediction for economic growth was slowing at the start of the year, allowing the Fed to lower rates this spring and three times in 2024.
Despite the hurdles, a recession with large job losses is unlikely. Consumer jitters appear to be rising. The New York Federal Reserve stated Monday that job loss fears are rising and that unemployed workers feel getting recruited is harder than before the pandemic.
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