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Inflation - Hitting American Households Like Never Before

Inflation – Hitting American Households Like Never Before

Inflation is an abomination that makes pockets bite and affects every single area of a country’s economy. This time it has hit the United States hard, with estimates saying that it has surpassed even the peak of the 1981 financial crisis. Inflation in the United States has hit a historic low, painting a dark picture of the economy. Know The Fact brings you the story of the inflation that has rocked the United States.
With inflation in America at an 8.6% annual rate in May, led by food and energy prices, it is a difficult time for Americans. Inflation is exerting a lot of pressure on American families who are still struggling as a result of the deadly COVID-19 pandemic. Inflation is forcing them to pay a higher price for food, gas, and rent. In lower-income groups, black and Hispanic Americans have been hit the hardest. This is due to the fact that, on average, a significant portion of their income is consumed by necessities.

Food costs
Food costs soared by 1.2% in May, bringing the year-over-year gain to 10.1%. Grocery prices increased 0.9% from March to 9.4% from the previous year. Eggs, chicken and milk are among the hardest hit products. The cost of eggs rose 10.3% from last month. The price of milk was up 3.1%, and the price of chicken increased by 3.4%. Butter increased 3.7% month over month. Margarine prices experienced a hike of 7.1%. Even with the current situation of inflation, alcohol consumption by Americans has remained more or less the same.

In another blow to the American population, rising prices mean that workers will have to take another pay cut during the month. According to a report by the United States Bureau of Labor Statistics, real wages, when accounting for inflation, fell 0.6% in April, even though average hourly earnings rose 0.3%. On a 12-month basis, real average hourly earnings were down 3%. This situation has helped fuel a rising tide of anger among workers.

Inflation - Hitting American Households Like Never Before
Inflation – Hitting American Households Like Never Before

Factors contributing to inflation
Inflation in America has been giving the White House and President Joe Biden sleepless nights. Government officials say that the COVID-19 pandemic and the Russian invasion of Ukraine are to blame.

The COVID-19 pandemic
When the COVID-19 pandemic hit, Americans were stuck at home for months. This caused an increased demand for goods such as furniture and appliances. This resulted in shortages and supply chain snarls and drove up prices. After the lifting of lockdown curbs, Americans have resumed their spending on services such as travel, entertainment, and dining out. This has led to an increase in the cost of airline tickets, hotel rooms, and restaurant meals. It has been reported that airfares went up by 12.6%, used cars and trucks went up by 1.8%, and dairy products went up by 2.9%.

Russia and China
To make matters worse, Russia’s invasion of Ukraine has led to an increase in the prices of oil and natural gas. In China, strict COVID lockdowns in Shanghai and other places have been eased. This has resulted in more of its citizens driving, leading to oil prices rising even further.
Energy prices rose by 3.9% since May, bringing the annual gain to 34.6%. Within the energy category, the United States Bureau of Labor Statistics has reported that “prices increased for fuel oil (70.1 percent), gasoline (48.0 percent), electricity (11.1 percent), and natural gas (21.6 percent) over this period.” High gas prices have led to an increase in the transportation costs of goods, further aggravating the American inflation rate.

The Biden Administration
With the November midterm elections approaching and rising inflation, President Joe Biden is in a tough spot. Unfortunately, the president’s policies, deals with the private sector, regulatory actions, and public persuasion have been unsuccessful so far to stop prices from climbing upward. The president is reported to have said that “My administration is going to continue to do everything we can to lower the prices for the American people.” The president said this after a decidedly bleak new report on consumer prices. Recently, in a Wall Street Journal op-ed, President Joe said he will “push for further improvements to supply chains and continue efforts to bring down the budget deficit.” Nonetheless, both he and Treasury Secretary Janet Yellen have emphasised that much of the responsibility for lowering inflation belongs to the Fed.
The Biden administration has largely denied that trillions of dollars in COVID aid played a significant role. Adding to this, the US government spent a whopping $40 billion in weapons shipments to Ukraine. Surveys show that most Americans see high inflation as the United States’ top problem. Most
Americans disapprove of President Joe Biden’s handling of the economy. The Democrats are facing strong opposition from the Republicans. This could potentially prove detrimental for the Democrats with the midterm elections in November this year.

Tips to deal with inflation:
A few practical tips that can be followed to save money include the following:
● To save money on groceries, consider planning out your meals.
● By swapping a less costly food item for a costly food item, money can be saved.
● Consider cancelling subscriptions that you can live without.
● Drive less for a month.
● Opt for creative activities that don’t require much spending.
● Rent out an extra room.
● Sell appliances, toys, or other items that are not necessary.
● Engaging in side gigs such as tutoring, typing, etc.

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