US Inflation: What You Need to Know

Inflation is all over the news these days. But what is it, exactly? And what does it mean for you? Let's break it down.

Inflation is simply the rate at which prices for goods and services are going up. In the United States, we measure inflation using the Consumer Price Index (CPI). The CPI tracks the prices of a basket of goods and services that are commonly purchased by consumers. The fact that you are reading this article means your on the internet. Internet access is included in the CPI !

So, what's happening with inflation in the US right now?

Inflation has been rising steadily in the US over the past year. In April 2022, the CPI increased by 8.3% compared to April 2021. That's the highest rate of inflation since 1981. "Ouch"

There are a number of factors that are contributing to inflation in the US right now. These include:

Supply chain disruptions: The COVID-19 pandemic has caused major disruptions to the global supply chain. This has made it more difficult for businesses to get the goods and materials they need, which is driving up prices.
Increased demand: The US economy is recovering from the pandemic, and consumers are spending more money. This is increasing demand for goods and services, which is also driving up prices.
Government spending: The US government has spent trillions of dollars in response to the pandemic. This has increased the amount of money in circulation, which can also lead to inflation.

What does inflation mean for you?

It means your money is worth less: When inflation is high, the value of your money decreases. This means that you can buy less with the same amount of money.
It makes it more expensive to borrow money: When inflation is high, interest rates tend to rise. This makes it more expensive to borrow money, which can make it more difficult to buy a house or a car.
It can hurt your investments: Inflation can erode the value of your investments. This is especially true for long-term investments, such as stocks and bonds.

What can you do to protect yourself from inflation?

There are a number of things you can do to protect yourself from inflation. These include:

Invest in inflation-protected assets: There are a number of assets that are designed to protect against inflation. These include Treasury Inflation-Protected Securities (TIPS) and gold.
Increase your income: If your income is rising faster than inflation, you'll be able to maintain your purchasing power. This may involve asking for a raise at work or finding a new job with a higher salary.
Reduce your expenses: If you can't increase your income, you may need to reduce your expenses. This could involve cutting back on unnecessary spending or finding ways to save money on your bills.

Inflation is a complex issue with a number of causes. It's important to understand how inflation works so that you can make informed decisions about how to protect yourself from its effects.