Inflation in the US has decreased more than expected in February. The Bureau of Labor Statistics (BLS) released the infection data in February 12 March. Last month, the infection in the US declined to 2.8 per cent. It was 3 percent in January. Inflation is the rate that suggests how much the prices of goods and services have increased in a period. The price of money decreases in a certain period of time due to inflation. There are many reasons for increasing inflation in the US. These include the issues related to the supply chain, the Housing Crisis and the Economic Package after Kovid. Here, inflation in India has also decreased in February. It has come to 3.61%.
Why inflation increases?
Increasing infection can also lead to increase in cost and increase in demand. BLS uses Consumer Price Index (CPI) for calculation of inflation in the US. For this, changes in the prices of goods and services of every category are measured every month. It has a total of 8 categories, including food, housing, apparel, medical care, recreation, transportation, education and communication. Inflation is seen as two-type-headline inflation and core inflation.
What is the difference between headline and core inflation?
Headline inflation means total inflation in a particular period. Core inflation does not include food and energy prices. If we look at the 30 -year period from 1989 to 2019 in the US, the average inflation rate has been 2.5 percent during this period. The US central bank has just kept a target of 2 per cent for inflation. In fact, after the commencement of Kovid, the US government gave economic packages to support the economy. Under this, people were given money from the government. This increased the demand in the economy significantly. Inflation started increasing due to high demand. In June 2022, Inflation in the US increased to 9.1 percent.
What is the effect of increasing inflation?
Increasing inflation has a direct impact on the economy. Increasing prices of goods and services means that you will be able to buy less good and services. Second, due to increasing inflation, the value of your money will start decreasing. If you want the value of your money not to decrease due to inflation, then you will have to invest your money. It has to be kept in mind that the return on investment should be higher than the infection rate.
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Why is high inflation not good for you?
Common people are very sensitive about inflation. In common colloquial, the term inflation is used instead of inflation. When inflation increases, governments fall. Common people start complaining to the government when inflation increases, because it directly affects their lifestyle. On the other hand, companies become restless due to rising raw material prices. The reason for this is that when raw materials are expensive, their margin decreases. Their profit starts falling as margin decreases.