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March Sees “Extraordinarily Elevated” Inflation Rates

/ The Upper Cumberland's News Leader
March Sees “Extraordinarily Elevated” Inflation Rates

March inflation numbers were even higher than most economists expected.

That’s according to Tennessee Tech’s Economics, Finance, and Marketing Chair Wesley Pech. Pech said that to the average person, inflation rates can vary based on lifestyle.

“The way that I understand it, one of the main reasons for why inflation has been so high is because of the price of shelter, food, and gas,” Pech said. “So for those workers who have long commutes, for example, and need to drive, they will actually probably experience an inflation rate that is actually higher than 8.5 percent.”

Pech said that on the other hand, a person who might not have to commute to work can experience lower than the average inflation rate. Pech said that for those consumers who are most affected by this high rate of inflation, his advice is to adapt as best you can to potentially endure these rates for potentially long-term.

Pech said that there are two main dangers when it comes to inflation: a decline in the purchasing power of consumers and arbitrary redistribution of wealth.

“It is unclear how this redistribution of wealth, for example from lenders to borrowers, because of high inflation is a healthy redistribution of wealth,” Pech said. “It’s very arbitrary, and it’s not consistent with any fundamentals of the economy.”

Pech said that the Federal Reserve has several tools available to fix this that all involve some sort of contractual or monetary policy reducing the amount of money being supplied into the economy. He said that usually this is done through higher interest rates, which is his guess as to what will happen at the next Fed meeting, which will probably happen in early May.

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