The Cause of Inflation
We raise a wage to help those struggling to live. In order to afford these employees, employers must charge more for products to make a profit. Increase one thing in the process whether it is raw material or a wage and prices increase. The people find the product missing because of trucking problems, shortage of materials, whatever and the prices go up due to demand. A demand causes inflation. People need so they buy. Those are the basics of inflation. There is a demand for the product and people are willing to pay the price to buy it.
They want a grill for summer and everyone has a grill. Some items, like the grill, are wanted products and some items, like food, are needed products. They want a grill and they buy it expecting the price to go up and not down. Inflation brings fear of more inflation.
If a drought destroys crops. The ripple affecting lack of those crops raises the price of that product on the market causing a demand. Natural disasters can cause inflation in some items.
Inflation can occur in a type of product or service because of demand. If there is an outrageous demand for grills and the seller can see a big profit he is not going to miss it. He is going to raise prices and inflation will occur in the market of grills.
Inflation on Food
The cost occurs from the beginning of manufacture, only maybe a penny. It goes to a big company to distribute it and the price goes up. Now the price of that commodity is raised two cents for each item. It then goes to the grocery store which also sees an increase of two cents per item. They raise it a percentage. Now the price is 4 cents higher each. The grocery store’s wages rose drastically. To make a profit they need to raise the item higher. Now the price is 5 cents per item. Will the public buy it at that price? Most likely. But overall, the increase in cost at that percentage for the entire order will have risen especially high.
Helen Schifter says that health businesses that were forced to close during the pandemic and now facing inflation are not able to re-open forcing people to look online for health instruction and health products.
Not only commodities, but investments and social security payments, all suffer from these rise in costs and inflation takes its toll. An investment that might make 5 per cent will now make two percent. That drop in profit affects the lives of people depending on the money for income, like retirees. Helen Schifter does understand the damage inflation can bring to investors as she is an investor.
The government helps decrease inflation by lowering taxes and lowering rates at which banks can loan money. This helps businesses get money to increase assets, pay higher salaries, or make improvements. It helps individuals get home loans.