Perhaps you have noticed the high prices of gasoline or travel costs recently.
Inflation in our country is at its highest point since 2008 as prices, specifically, in travel are the highest they have been in quite some time.
Currently, the consumer price index (CPI) is 5.4% higher than it was at the beginning of the year, and core inflation, excluding volatile prices in oil and gas, is 4.5% higher.
But many economists and experts agree they think the current rise in prices will be short-lived.
“It is not looking to be like inflation that’s really broad-based and has a lot of momentum. I think it’s going to burn itself out relatively soon,” said Josh Bevins, research director at the Economic Policy Institute.
Bevins says one of the reasons inflation is so high at the moment is due to the quick rebound from the COVID-19 pandemic when prices and the economy were at their lowest in decades.
When comparing current prices to those during the pandemic, it will look much more drastic than the current reality, he says.
“You only have bottlenecks if demand is really strong,” said Bevins. “It is a good thing that a lot of people want to do that travel that they couldn’t do for the last year. It means that they’re feeling economically secure enough to do it.”
The price index, or where prices are across the board, is roughly the same as where it was before the pandemic, says Bevins.
Many prices are inflated due to the quick rebound in demand as supply shortages still affect the market.
Take air travel, for example. Many plane cabins reduced capacity during COVID, so the prices we are currently seeing are factored into that decrease.
It's the same with rental cars. Because few people were traveling, many companies sold off their fleets, leaving the supply low as the demand for them is rebounding.
Factor in shortages in auto-manufacturing and it is only exacerbating the problem.
“I do think this is temporary, and I think inflation will settle down by the end of this year,” said Bevins.