‘It’s not time to panic’: Charlotte economist weighs in on inflation increases
CHARLOTTE, N.C. (WBTV) - According to the U.S. Labor Department, overall consumer prices rose 5.4% in June compared to last year.
This marks the highest 12-month rate since August 2008, during the Great Recession.
Prices are up for everything from groceries, to gas, cars, even plane tickets.
“I can’t believe I’m paying six dollars for a dozen of eggs,” Ronnie Flansburg said.
Queens University of Charlotte economics professor Dr. Harry Bowen says inflation, something that came with the territory of a global pandemic, is to blame.
“There was an enormous pent-up demand because people couldn’t go to restaurants, couldn’t take vacations, and suddenly they can,” Dr. Bowen said. “So they start to go out and spend and buy things.”
But Bowen says the supply is not meeting the demand.
“In a lot of sectors in terms of transport and these things, they also had in effect reduced capacity, so it takes time for these things to gear up and meet the demand,” he said.
It’s stressful for people like Donetta Caraway, a working, single mother of two.
“I tell my kids, ‘OK, slow it down a little bit on the eating, if possible!’” Caraway said.
But the good news is, Dr. Bowen does expect inflation to ease.
“I would think that these special circumstances, supply disruptions, other kinds of issues, are likely to resolve themselves in the next few months,” he said. “Three to four months at maximum.”
Dr. Bowen believes the only thing standing in the way are large federal stimulus packages and further extension of unemployment benefits.
“If we continue a policy that perpetuates that lack of supply or ability to supply, eventually the gap between demand and supply is going to grow, and prices with it,” he said.
Federal Reserve Chairman Jerome Powell spoke to the House Financial Services Committee on Wednesday. He said the economy is “a ways off” from where it needs to be for the central bank to change policy.
Powell said inflation is likely to remain elevated in the coming months before moderating.
Copyright 2021 WBTV. All rights reserved.