You should care about inflation

Most who have opened the front page of The Wall Street Journal or The New York Times, or, frankly, anyone who has kept up with current events, will know about the historically high inflation rates that the United States has experienced over the past year, specifically within the past several months. Inflation, primarily tracked by the Consumer Price Index (CPI), shows that in July prices of all goods and services purchased by households were on track to rise 8.5% over the year. If you haven’t seen the data, you’ve definitely seen the high gas prices that have slowly crept down within the past sixty days.

This has not been the only significant change since the Russia-Ukraine war; although you may not be witnessing it firsthand, millions of people across the country have been seeing their weekly grocery bills grow more expensive to the point where Americans are forced to cut back and live with more caution regarding their expenses. 

So what is being done to fight against inflation? A lot. 

The U.S. Government’s Central Bank, the Federal Reserve System, commonly known as the “Fed,” has power over the Federal Funds Rate, the interest rate at which banks lend money to one another overnight. Although seemingly counterintuitive, the tactic the Federal Reserve uses when inflation is high is to raise those interest rates in order to make it more costly to spend money. This slows down spending in the economy, which will force prices to come down. 

A CNBC survey shows that 63% of economists believe that the Fed will raise interest rates too high to the point where a recession is caused. What does this mean for you? As a high schooler who probably doesn’t do their grocery shopping, you might not notice much. However, as each one of us gets closer to adulthood, you will eventually be forced to keep track of what is going on not only in the news but also in the economy. With adulthood comes the responsibility of keeping track of expenses, paying attention to what is happening, and understanding when to cut back and save for the future will be vital. 

Read the news, pay attention during your economics or finance class, and take advantage of our opportunities to prepare for the future.