(WWJ) – The cost of living is soaring all across the country, including here in Michigan. Gas is back up to around $4 a gallon; grocery bills are rising, while the housing market is running wild.
Why’s this happening? The simple answer is inflation. But that word alone doesn’t really explain much – so what’s behind the inflation? What’s causing people to look for ways to save a buck, or in many cases look for new ways to make an extra buck just to make ends meet?
WWJ’s Brian Fisher went looking for answers on a new Daily J podcast. One Wayne State professor says inflation has been rising since things have returned to more normalcy coming out of the pandemic.
“We have seen inflation occur in the post-COVID period largely because people are returning to work and salaries are rising substantially and people have more money. But we initially had some disruptions to production, which meant we didn’t have enough things to buy,” said WSU econ professor Shooshan Danagoulian.
With so-called “shortages” of many goods and products over the last several years, she says as a result, producers and retailers are raising their prices to make up for higher demand, as well as making up for higher wages.
“Think of the fact that in the immediate period of the openings after COVID, we saw a whole bunch of help wanted ads all around us,” she said. “The obvious solution to a help wanted ad that’s not filling up is to raise wages.”
But when wages go up, so too do the prices because producers and retailers have to pass some of that cost onto the consumer.
As for how the federal government is handling inflation, another professor says rising interest rates should eventually help inflation "settle."
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