Inflation: Economists attribute higher prices to government spending and the ongoing labor crisis

HOUSTON, Texas (KTRK) – A membership of a wholesale supplier cannot even mask higher prices caused by inflation.


On Tuesday, the US Bureau of Labor Statistics released their producer price index. It shows wholesale inflation has increased by 9.7% from January 2021.

This affects wholesale businesses before it reaches consumers. However, it may affect wholesale shoppers at Costco and Sam’s Club.

RELATED: Inflation up 7.5% from 2021, highest annual gain in 40 years, report shows

Shopper Sarah Smith said: “It’s a pleasure going to the wholesale stores. You get things cheaper than most other places.”

“While some companies buy in bulk can save you money,” explains Jorge Barro, a public financier at Rice University. “That’s always been the case and I don’t think that’s going to change, but I wouldn’t expect to be able to overcome that inflationary pressure just by buying in bulk instead of the usual retail.”


Not only did the producer price index increase, this number also impacted consumers. Last week, inflation in commodities was the highest in 40 years.

Shopper Bresha Lyles said: “It’s a bit frustrating because it’s like, why is bacon close to $5 now, or cereals have gone up so much as well,” says shopper Bresha Lyles. “I buy brand name. It’s like $4.33 or $5 for a box of cereal.”

Economists attribute inflation to government spending and the ongoing labor crisis. The federal government has approved trillions of pandemic spending and sent out stimulus checks to Americans.

RELATED: Prices rise across the US as inflation rises

This allows the neighbors to have more money to buy goods. At the same time, manufacturers are dealing with a labor crisis. Businesses can’t find workers, and Americans quit in record numbers.

With increased demand for goods and insufficient production, this causes the prices of commodities to rise.

“I think most economists expect inflation to fall again in the next year or two,” Barro explained. “The question on everyone’s mind is will inflation return to the levels we saw before the pandemic?”

“The question on everyone’s mind is whether inflation will return to the levels we saw before the pandemic.”


Economists are waiting to see what the Federal Reserve will do. The agency hinted at raising interest rates as a way to cool down inflation.

If it happens, it will affect the loans. This means that if you need a loan to buy a house or a car, the interest will increase, which means your monthly payment will increase.

RELATED: Tips for managing your finances in times of inflation

“Rising interest rates will hurt anyone looking to finance any large purchases,” Barro said. “So in general, what I would say is if you’re looking to make a big purchase over the next year or two, make sure to factor in the possibility of a rate hike.”

The Federal Reserve is scheduled to meet on March 15. This may not be the only time interest rates have been adjusted.

Economists said continued cooling of rising prices; interest rates could be changed throughout 2022, which could bring down inflation over the next few years.

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