INDIANAPOLIS (WISH) – There are inflation concerns about the growing price spike. The US Bureau of Labor Statistics says consumer prices rose faster than expected in March.
However, this is a normal part of a growing economy. It’s likely that inflation will spike a bit when the post-pandemic economy is in full swing. Consumer prices have increased by more than 2.5% compared to the previous year.
Local economist Kyle Anderson historically says that prices have increased an average of 3% per year. Over the past 12 years, inflation has been below average at around 2% per year.
Anderson says high visibility goods will increase now as the economy changes. He says gasoline prices will be higher this summer as more people travel. In March alone gas prices rose by more than 9%. In addition, airline tickets, hotels and food will all increase.
“A lot of people have extra income because they haven’t spent,” said Anderson. “For many households, they did not lose any money during COVID. They kept their jobs and did not spend as much. So there’s this pent-up demand that we’ll see, whether it’s restaurants or travel. I think these are the biggest areas and I think people will plan to do so even if prices go up a little. ”
Anderson says the Federal Reserve has a mandate to prevent high inflation. It does this by increasing interest rates when inflation rises too high. This tends to slow the economy and prevent high inflation. So if inflation accelerated sharply, the Federal Reserve would take action. Anderson says that probably won’t happen next year.
For the next few years, economists expect higher inflation than in the last ten years.