Inflation has always existed but it is usually unnoticeable. However, due to the pandemic, the speed of inflation has severely increased, and everything has gone up in its price in the past year. It is a struggle for those who do not currently have a job and need to feed their family. Starting from clothing, food, entertainment, and gas many of these prices have gone up at least 10 percent or more, especially fuel oil which has raised 80.5 percent of its price compared to last year.
The COVID-19 pandemic ignited this fire. COVID-19 as well as the Russian invasion of Ukraine has changed our daily lives and the global economy in ways that no one has ever imagined. Nevertheless, it will accelerate the momentum of change.
Many people struggle with ridiculous prices because the United States spent trillions of dollars in stimulus when Donald Trump was in office. The United States alone spent around $7 trillion. Another reason why is because lots of people got fired. Since they do not have to pay rent right away some people just stop looking for a job. Also, consumers are spending a ton of money. Many people still spend lots of money on luxury brands even though many luxury brands raised their prices up to three times.
In response to inflation, California state stated that they are going to change the minimum wage from $15 to $15.5, which was a great move if viewed from a short-term point of view because California is very overpriced in everything compared to other states. This decision was made for employees but this decision puts lots of pressure on employers and CEOs who are in the same inflation situation as employees. It could lead to going back to the starting point because many employees will lose jobs because of this. This could lead to the economy worsening.
Inflation sometimes leads to economic growth. However, this is the worst inflation experience for most of us. Inflation is not always bad, but current inflation is getting out of hand. According to the U.S. government, the inflation rate tops forecast inflation rate has increased by 8.5%, the highest since 1981, and of course, as a result of it, the stock market also collapses. The price of one share may stay the same but its value starts to lose. To put it simply, the value of items increases more than the money you made from stocks.
According to Warren Buffet, when inflation comes people should take advantage of it by investing. He said you should invest in a company that has strong brand power, real estate, and an index fund that has fewer risks. This is strong and well-known advice however, very challenging. When it comes to investing when someone earns money someone is losing at the same time which makes this advice challenging.
In times of crisis, we need to stay together and help each other. There are many people who lost jobs and families due to inflation and many people who benefited from inflation like people who own land or have physical assets. Just like them, we need to look further and be smart about our choices during inflation.