Inflation: The Biggest Jump in 30 Years

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Inflation: The Biggest Jump in 30 Years

Inflation is the increase in the price of goods or services due to weakening currency caused by economic triggers such surges in product demand, production cost-increases, or supply chain breakdowns. Americans have experienced inflation since the beginning of the county, and have gone through multiple periods of high inflation rates. 

The first of these high inflation periods was in 1778 when directly after the Revolutionary War Americans experienced a nearly 30% increase in inflation rates. This was due to the debt that was accrued in order to fund the war, and this triggered the highest inflation rate that the country has ever seen in its entire history. Another period of importance was the time between 1965 and 1982 when inflation rates and unemployment rates were rising together, causing the Great Stagflation. During this time inflation rose more than 14%! 

So we can see that inflation is not a new experience, but we are currently experiencing the largest jump in inflation since the time of the Great Stagflation. In 2021, inflation rose nearly 7%! This is the highest rise in inflation in the past 30 years, and is concerning since the Federal Reserve aims to keep inflation at 2% or lower each year.  This rise in inflation also placed America as the country with the eighth-highest inflation rate in the world as of Q3 2021. Americans are experiencing prices that are almost 16 times higher than they were 100 years ago, and prices are rising significantly even from the past year. 

Compared to last year, prices are rising in all categories of goods. For necessities, Americans are paying 8.3% more for food and 6% more for healthcare than they were in 2020. Other categories include a 5.6% increase in price for clothing, 4.6% increase in energy and a near 30% increase in used cars. 

We are currently experiencing something referred to as “runaway inflation” which the government has multiple strategies to attempt to control. These strategies include reducing the amount of money in circulation, decreasing bond prices, and increasing interest rates through the central bank. These strategies can have unintended consequences though, with a decrease in spending power, job losses, and the induction of recessions. Many people can recall the Great Recession of 2008 which was brought about from attempts to reduce inflation in the United States. 

Inflation is inevitable, but there are strategies you can adopt to make sure that your personal finances are protected. Learn about these strategies and more about inflation in the infographic below: 

Why is Inflation so High?

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Author: Firdaus

I work as an IT consultant in the Toronto area and I love to write blogs about a variety of subjects. My passion for writing stems from the desire that everyone should have access to meaningful information. Whether it is a blog about society, culture, technology, or social media, I don’t want to miss the opportunity of sharing my thoughts with my friends and audience. Since I believe in mutual exchange of ideas, I am always on the lookout for a feedback on my writings.

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