You feel it every time you buy almost anything. Inflation seems to be getting worse. Dr. Matt Will, professor of economics at Indianapolis University, says you should probably prepare for even higher prices because of the Russian war and the government’s methods of controlling inflation.
“October, people don’t remember it, but it was below seven percent. It’s been revised down to 10.8 percent. So inflation is worse than we thought,” he said. said Will. He said it costs more for companies to produce their products, which will have to be passed on to the consumer.
You may have heard Pres. Biden says companies shouldn’t cut wages, but rather cut costs. Will said he didn’t believe this approach would succeed.
“Government tends to react to inflation by trying to control prices. It is a mistake. Not once in the history of the world has it worked. What it dies is it causes shortages,” Will said. “Gas mains in the 1970s, shortages of consumer goods at other times in history.”
Will said he didn’t see much relief coming.
“The only way to reduce inflation is for the government to stop spending money and raise the federal funds interest rate. The Fed and the Federal Government control whether or not we have inflation.
Will said the war in Ukraine will drive up the prices of many commodities, not just oil and gas.
“Russia is the biggest exporter of grain, fertilizer, nickel, palladium, they also send 40% of Europe’s natural gas to Europe.”
Will added that Russia produces about ten to twelve percent of the world’s oil.
“When these products are reduced and they cannot be exported by Russia, it will also increase the prices for the consumer, in addition to what the federal government of the United States is doing,” he said.
He said that COVID; supply chain issues, exacerbated by a labor shortage in California; federal government spending and the global political crisis have economists believing that inflation will not ease any time soon. Will said the impact will be mitigated in Indiana, at least with the state government, because the state’s tax house is in order, with a surplus.