Inflation has become a problem in America after a decade of relatively slow growth in the prices of most items Americans buy frequently. New data show that the inflation rate in the United States has picked up and has reached 5.4%
The new University of Michigan Survey of Consumers showed inflation uncertainty reached a four-decade high. This will almost certainly affect consumer spending. People who worry about inflation wonder what will happen to the costs of everything from food to mortgages. One offsetting factor is that wages are rising. Wages recently jumped at a record pace.
Do rapidly rising wages cause people to buy more? Ironically, that depends on how much people are worried about inflation.
Inflation is in the United States is tame by the standards of other counties. The inflation rate in Venezuela is 1,946%. The next highest nation is well below that. The inflation rate in Sudan is 366%.
Venezuela’s inflation rate has destroyed its economy. And, the problems are not new. According to Trading Economics, the country first hit a rate of hyperinflation in 1979. People cannot even buy basic goods now. The AP quoted Lourdes Pórtelo, an office worker: “Today, I went to the supermarket and everything was marked in dollars. In the end, I couldn’t buy anything, I didn’t have enough money.” At one point, the highest denominated bill in the country was for 1 million bolivares (the name for the local currency.)
Among the reasons inflation is so high in the country is a lack of goods. The economy has been so badly crippled that the production of almost everything has cratered. To offset the trouble the government printed more currency. As people converted their money assets into dollars, the price of the bolivares rose further.
Among the results: 3 million people have left the country. That is 10% of the population.
Some problems have ready solutions. Others appear to have no solution at all. For the time being, inflation in Venezuela falls into the second category.
Click here to see which household item has a soaring price.
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