Why Is Inflation So High and What Causes It?

The latest consumer price index (CPI) reports a 7.7% increase in inflation over the last year (a 40-year high).

While there is no single factor that can fully explain this trend, there are a few key drivers that have contributed. Here are some of the culprits:

America’s economic stimulus package was an additional influx of funds into the economy, further contributing to inflation.

1. Too Much Money In  The System

People are willing to pay more for goods when they are insufficient, racking up inflation figures.

2. Supply And  Demand Imbalances

Supply chain issues often have a devastating effect on the prices of goods. Without critical inputs, businesses cannot run optimally, causing a supply shortage.

3. Supply Chain Disruption

The ongoing war has resulted in decreased supplies of oil and gas, food, and metals, pushing up the costs of these commodities.

4. The War In Ukraine

5. Rising Energy Prices

Every company needs energy to power its operations. Therefore, rising energy costs are bound to affect food prices and other essential commodities.