INDIANAPOLIS (WISH) — There are Inflation concerns over the growing rise of prices. The U.S. Bureau of Labor Statistics says consumer prices increased faster than most expected in March.
However, that’s a normal part of a growing economy. It’s likely that we will see inflation increase a little bit as the post-pandemic economy goes into full swing. Consumer prices are up more than 2.5% from a year ago.
Local economist Kyle Anderson says historically, prices have risen about 3% per year on average. Over the last 12 years, inflation has been below average, around 2% per year.
Anderson says high visibility goods will increase now that the economy is changing. He says that means gas prices will be higher this summer as more people travel. In March alone, gas prices increased more than 9%. Plus, airline tickets, hotels and food will go up.
“A lot of folks have extra income because they haven’t spent,” Anderson said. “For many households, they haven’t lost money during COVID. They have maintained employment and they haven’t spent as much. So there is this pent up demand that we’re going to see going out whether that’s to restaurants or travel, which I think is the biggest areas and I think people will plan to do that even if prices go up a little bit.”
Anderson says the Federal Reserve has a mandate to prevent high inflation. It does this by raising interest rates when inflation picks up too much. This tends to slow down the economy and prevent high inflation. So if inflation starts to pick up a lot, the Federal Reserve would take action. Anderson says that probably won’t happen any time in the next year or so.
Going forward over the next few years, economists expect higher inflation than we have seen over the past decade.