ARIZONA, USA — We’ve all been dealing with rising prices and costs with inflation up more than 7% and supply chain issues continuing to affect Arizona and the country.
An expert from ASU is expecting the problems to continue throughout the year.
Likely to persist through 2022
As of January 2022, the Bureau of Labor Statistics Consumer Price Index had things like meat, poultry, eggs are up 12 percent since a year prior.
The index also had fuel up 40 percent from January 2021 to January 2022.
“We’re seeing inflation that we haven’t seen in 40 years and our paychecks are not keeping up with the pace,” Hitendra Chaturvedi, a supply chain management professor with ASU’s W.P. Carey School of Business.
Chaturvedi said despite prices being so high, consumers have continued to spend, likely due to savings that have been pocketed over the last two years.
However, Chaturvedi said as savings dwindle for Americans, he expects to see people start to cut down on things like travel and leisure, groceries and other places where cuts can be made quickly.
“If things improve and if you’re able to get this inflation under control, our economy is not going to be impacted as negatively as many are predicting,” Chaturvedi said.
Ukraine conflict prolonging economic issues
Chaturvedi had previously thought it would be the end of 2022 when we’d see improvement in supply chain problems.
“You are going to see this problem potentially stretch out into the first quarter of 2023,” Chaturvedi said.
Chaturvedi said it’s the conflict in Ukraine that’s complicating the economy in the United States due to things like the sanctions imposed on Russia and the impacts to broader Europe.
“We are doing it for all the right reasons,” Chaturvedi said. “But if you economically look at it, we need to be ready that the pain that we are seeing in terms of price increases today, this intervention is not going to make it better.”
The Fed could help in March
What could help address inflation, would be how much The Federal Reserve raises interest rates in March.
Chaturvedi said it’s a big variable and it’s not clear how much interest rates might be raised.
“I think that increase in interest rates will automatically curb some spending, and if that starts to tame down the inflation, then that could be a soft landing,” Chaturvedi said.
However, with supply chain problems likely sticking around through the year, Chaturvedi said inflation could continue still too.
“It is a very slippery slope, that even if The Fed raised the interest rate, and the supply constraints are still persisting, and inflation is so persistent, then we have a bigger problem on our hands,” Chaturvedi said.
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