While consumers around the world are paying more for items like food, clothing and household supplies, and for major purchases like cars, appliances and homes, the most severe impact goes to lower-income households.
According to the vice president at Moody’s Investors Service, inflation most impacts lower earners, who spend more of their average dollar on gas, food and other items that may be rising in price, Foster commented on CNBC. Wealthier individuals, who tend to hold more financial assets like stocks or homes, may be better able to offset the impact of inflation, he added.
Even though average hourly wages grew 3.6% in June relative to last year, which made it the most in more than a decade, the current inflation gave the average worker about a 2% pay cut, reports the Bureau of Labor Statistics.
What’s important is that it’s unclear whether higher consumer prices and wages are temporary or longer-lasting, according to economists. Some of the inflation is surely the result of short-term dynamics, like supply constraints and a surge in demand as consumers emerge from a pandemic-induced hibernation.
But some experts expect inflation to become permanent."There are very many reasons to think that this inflation is not transitory — that it's going to be with us for quite a while," Desmond Lachman, a senior fellow at the American Enterprise Institute in Washington, told VOA.
According to VOA, On Tuesday, the price of the global benchmark for oil, Brent crude, rose to $82.56 per barrel, hitting a level not seen in three years. Worldwide, prices for food, fuel and consumer goods are on the rise. Natural gas prices have more than tripled in Europe and Asia this year, causing economic slowdown in Europe and power cuts in China.
