The Truth About Price Increases and Inflation

Let’s be open and honest about prices and inflation, shall we?

Within our economy, the two major market forces determine pricing: supply and demand.  A clear example of this dynamic was in late 2020, when people were doing an immense amount of property improvement projects.  The supply of building materials was reduced and an increased demand from people doing more projects meant that suppliers and stores increased prices.  The vast majority of price increases stem from supply and demand that is affected by corporate decisions and changes in consumer behavior, not the President.

Regarding inflation, it has averaged around 2.5% in the last ten years, which is low compared to other recent decades.  Recently though, one of the biggest causes for price inflation are decisions made by corporations to increase their profits.  As highlighted by Business Insider (https://www.businessinsider.com/how-measure-inflation-raise-prices-corporate-profits-supply-chain-2022-2), many corporations are increases prices to further drive profits, despite reaching record level profits for up to three fiscal quarters in a row.  It is estimated that approximately 60% of our inflation is being driven by the pursuit of corporate profits.

Our economy is going strong and recovering, as we have almost pre-pandemic unemployment levels and the Federal Reserve (an independent government agency) is planning to start using its tools to combat inflation.  What we need to do is to continue with the goals of pushing for wage increases to benefit everyday people and keep corporations in check and out of politics.