The cost of living has gone up exponentially in the past few years. The reasons for this are, in part, a combination of effects from the Coronavirus pandemic. The government needed to get the economic world out of the state it had gotten in, and, to do so, they injected money into the economy in the form of stimulus checks and lower interest rates. This encouraged people to spend, but ultimately has driven up the prices of almost everything. 

There have also been disruptions in supply chains. For example, China has enforced very strict lockdown restrictions, which made getting products into the United States much more difficult. The reason we’ve seen oil and energy prices go up so much is because Russia is a large exporter of these two. Since the war in Ukraine started in February of this year, Russia has been somewhat cut off, leaving us with higher gas prices. 

Inflation is an increase in the general price level and a decrease in the purchasing power of the dollar.Understanding inflation helps citizens make informed decisions about spending when it comes to things they need and want. 

“People are just now beginning to understand how difficult it is to live in a world like this. People’s savings are getting eroded overnight, and wages are moving up. It’s difficult for people of power to act with intent, force and strength without undoing the gains we’ve made,” IB economics teacher Chris Duke said.

Experts caution that we will likely continue to see inflation for a long time. It’s impossible to predict how long it will take for such a large problem to be completely solved, but the people who can make a change are doing what they can. The Federal Reserve has actually started to raise interest rates to counteract the lowered interest rates we saw in 2020. 

“[The pandemic is a] very unique economic challenge, where at its peak we saw the highest unemployment rates since the Great Depression,” Duke added. “It’s understandable that our government had to take pretty aggressive stimulus actions, but it’s hard at the moment as we recover to then know when and how to pull back on that. I think the economy is always a moving target, and the pandemic has made it particularly difficult to hone in on the right set of policies.”