Will we see it go down?
Inflation is unavoidable. At the gas pump, the local grocery store, even on big-ticket purchases – like buying a used car – you’ll experience it. The omnipresent nature of inflation has many Americans wondering when inflation will end. No analyst can predict with accuracy when it will end. But they can confidently determine if there are signs of it slowing down.
The pandemic has ravished the economy. That’s not the only reason inflation has increased by 6.7%, reaching rates last encountered in 1982. The Fed called this rise “transitory” eluding to a possible end, perhaps soon.
But, pundits are painting a different message: inflation is here to stay. Part of the rise in inflation was attributed to industries that were previously affected by restrictions – restaurants, hotels, rental car companies, and clothing stores – cutting back on pandemic-inspired discounting. But there is more to rising inflation than restaurants being open.
The staying power of inflation will be determined by whether businesses decide to bank on consumer demand remaining high. Currently, most retail industries are tentative about supply, choosing to be cautious about any retail sector rebound and test consumer spending before committing to more inventory. The summer seemed like a good time to test consumer spending, but Delta hit, extending the inflation outlook. Now we have Omicron, which is more transmissible than other variants. At this point, it’s anyone’s guess when inflation will end, but the consensus is we’ll be well into 2022 before we see signs that it’s slowing down.