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Inflation causes and how consumers can fight it

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Published  April 18, 2022 9:39pm PDT
COVID-19 and the Economy
KTVU FOX 2

Inflation causes and how consumers can fight it

The most effective thing we can do to fight inflation now is buy less, a lot less, until decreasing demand meets up with now increasing supplies. Economists say a five-phase chain reaction caused our high inflation.

OAKLAND, Calif. - Inflation caused consumer prices to go haywire and it will take many months for Uncle Sam to cool demand with higher interest rates. A five-phase chain reaction caused our high inflation. 

First, says Brooking Institution's Wendy Edelberg, came high consumer demand for all manner of consumer goods at levels we never saw before. "It is a mystery how we even have storage space anymore," said Edelberg.

On top of that, sickness, slowdowns and shutdowns at raw materials and parts suppliers made production difficult, if not impossible, for manufacturers also having sickness, slowdowns and shutdowns. Second, the limited goods, went to shippers also wracked by sickness, slowdowns and shutdowns, completely discombobulating the world truck, ship, plane and port supply chains. E-tailers and retailers, could not fulfill all those orders. Just as we were beginning to round that corner, Russia invaded Ukraine, spiking worldwide fuel prices.

The most effective thing we can do to fight inflation now is buy less, a lot less, until decreasing demand meets up with now increasing supplies.  

"Pull back on our goods spending. So, that would certainly help and reduce the pressure on our goods sector," said Edelberg. The other thing people can do, take those four million jobs available and get the economic gears running smoothly again. "Get out there and take these jobs that are being offered and these sign on bonuses. But, that's largely, in my mind, going to depend on the pandemic," said Edelberg.

Vaccines notwithstanding, many people still fear catching COVID. Adequate, affordable childcare remains a return to work roadblock. Stimulus payments as well as rent, mortgage and school loan moratoriums allowed many people to increase savings delaying their return. 

"We have 360,000 fewer workers today in California's civilian the workforce than prior to the pandemic," said Michael Bernick, labor lawyer and former EDD Director.

UC Berkeley economist Jim Wilcox says though prices for goods, fuel and foods are already beginning to retreat, one major wild card remains. Professor Jim Wilcox, a renowned UC Berkeley Haas economist said this. "The other unknowable is what effect Russia's war on Ukraine will have on all of these prices."