The United States Bureau of Labor Statistics announced in its latest report of the Consumer Price Index that, in the last 12 months, inflation increased 7.5%.
This is the highest inflation rate the country has seen in almost 40 years.
Although inflation is worsening, it should be noted that the labor market is good. In other words, if you are looking for a job, you should be able to get it relatively easily. The bad news, however, is that paychecks haven’t kept pace with inflation, economist Steve Moore said in 24 News.
This means that people feel more and more the pressure of high prices .
Moore says that people should stop making unnecessary expenses, as well as borrowing to level their situation, in addition to the fact that the government should stop printing more money.
Moore also said that interest rates are expected to start rising next month, which could balance the situation a bit.
The logic behind the Federal Reserve raising interest rates is that when the economy slows down, the Federal Reserve can choose to lower interest rates. This action encourages companies to invest and hire more, and encourages consumers to spend more money, which helps boost economic growth.
On the contrary, when it seems that the economy can be growing too fast, the Federal Reserve may decide to raise rates, which makes employers and consumers curb their spending.
And it is that if the economy grows faster than its capacity , prices will rise rapidly and products will become more expensive. This happens when people want to buy more than the stores and factories can supply. That is why it is important to control its growth.
The Federal Reserve is expected to start raising rates in March to control inflation.
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