The consumer price index for the month of April rose to 8.3%, another 40-year high. Economist Loren Scott said each month the Bureau of Labor and Statistics looks at the average price for a basket of goods, for example, gas, a gallon of milk, a loaf of bread, and a month’s rent.
“So, what they do is each month, they watch what happens to the price of that market basket of goods, and that’s what we call the Consumer Price Index and that’s the basic way we measure inflation in the economy,” said Scott.
Scott said the Russian invasion of Ukraine and continued supply chain issues are impacting the inflation rate. The inflation rate has hovered around the 8% mark for a few months now and Scott said the lingering question among those with fixed incomes is whether the inflation rate is transitory due to supply chain issues.
“Inflation is making the purchasing power of that fixed income go down. You’re taking an 8.5%% cut in real purchasing power, and that’s what got people really frustrated night now,” said Scott.
Scott said however it’s not all doom and gloom, he said predictions from Well Fargo Economics Department and USA Consensus Forecast indicate things should improve.
“They are all saying it’s going to drop from an average this year of 7.4%, down closer to 2.5% maybe 3% next year,” said Scott.
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