Inflation: The Rise & Fall of The American Economy Essay

1714 Words 7 Pages
Why is inflation bad for the American economy? Imagine going into the popular local food market or gas station several times a week. After a couple of weeks, imagine going into these stores and noticing the prices have steadily increased over the past few months. This is called inflation, and it is causing many problems in the United States. There are three different types of inflation: demand-pull, cost-push, and built-in. Demand-pull inflation occurs when prices increased because of such high demand. Cost-push inflation is when prices surge resulting from high input costs. Built-in inflation is when prices continue to rise after any natural causes. The inflation occurring in America is a demand-pull. Inflation has affected the United …show more content…
Even though vegetable prices were supposed to drop after festive season, mid-November, it is very unlikely. Rutherford also pointed out that, "World populations are paying record prices for cereals, meats, and all other types of products" (Rutherford 1). These high prices have impacted the United States negatively and positively.
Grocery stores tend to make their own market brand products because of high priced retail products. These "market-brand " products are sold at a cheaper price, which helps the wallet wary shoppers. The wholesale price index (WPI) has been negatively impacted by inflation. Wholesale price index measures and tracks the changes in prices that retailers pay for finished goods. Inflation only becomes negative when it goes beyond 5.5%. Inflation should be reduced to aid more shoppers in the U.S.
U.S. consumers try to adapt to these rising prices in a number of ways. "Consumers eat more processed and prepared foods, which reduces the influence commodity prices have on retail food costs" (Rutherford 1). People tend to buy more fast food to avoid these retail food prices. Fast food retailers have also adapted to their customers. Now that retail prices have increased, fast food restaurants have introduced "value menus. " These are processed and prepared food items that are always available at a much cheaper price. Commodity price inflation in retail…