It is known
that Inflation is the decline of purchasing power of a given currency over
time. A quantitative estimate of the rate at which the decline in purchasing
power occurs can be reflected in the increase of an average price level of a
basket of selected goods and services in an economy over some period of time.
The rise in the general level of prices, often expressed as a percentage, means
that a unit of currency effectively buys less than it did in prior periods.
If the rate
of inflation stands at 1 per cent, for example, it means that prices of
everyday items have risen by 1 per cent on average. This means a bag of pasta
costing $1 a year ago will now cost you $1.01.
That's the
general increase in the cost of everyday items. Which leads to a gradual
decrease in your money's purchasing power. Because a dollar doesn't stretch as
far when things get more expensive.
There are
some reasons driving the current spike in prices:
1- High
demand for oil and gas along with uncertainty over supply pushing energy prices
up across the globe. This has led to higher costs for energy companies and
subsequently, their customers.
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2- Both
Russia and Ukraine export important commodities such as wheat, the price of
which is already soaring. The bread makers already fear that increased costs
will be passed down to consumers.
3- A ton of
commodities (aka raw materials) can be negatively impacted if the weather is
too cold or dry. That can lead to shortages of goods like corn and wheat. And
those added costs trickle down to consumers.
4- Global
shipping companies which move goods around the world have been overwhelmed by
surging demand. It's meant retailers have had to pay a lot more to get those
goods into stores. As a result, prices have been passed on to consumers.
5- Shortages
of some goods due to supply chain disruptions.
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10 things
that will be more expensive in 2023 that include housing, food, clothing,
heating costs, gas, dining out, cars, computers and electronics, furniture, and
medical care.
- Meats,
poultry, fish and eggs: 13% increase
- Fruits and
vegetables: 7.6% increase
- Electricity:
9% increase
- Furniture
and bedding: 17.1% increase
- Women’s
dresses: 13.5% increase
- Jewelry
and watches: 4.2% increase
- Rent of primary residences: 4.2% increase.
