Given the choice between paying for housing or feeding your family, which would you choose? Making such a decision is unfathomable, but it is a reality that many Long Island families continue to face as we recover from a surge in global inflation that began in mid-2021, resulting from outpaced consumer spending on goods over services, consequently producing corporate price gouging.
According to the July 2024 issue of the World Economic Outlook, published biannually by the International Monetary Fund, “Global inflation is forecast to decline steadily, from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025.” Although the forecast suggests that inflation is leveling off, corporations around the globe have not been motivated to lower their prices for consumers.
Contributing to this corporate reluctance to lower prices is service inflation, or price changes in service-related categories including transportation, food, and accommodations. The World Economic Outlook states that service inflation “[…] is holding up progress on disinflation, which is complicating monetary policy normalization.” As long as service-related categories are facing higher costs, then reductions in goods-inflation will continue to lag, making it difficult for families in lower tax brackets to keep up with economic demands.
Despite widespread confusion and political propaganda accusing elected officials in the United States of driving inflation through poor policy making, the Economic Policy Institute states that an international comparison among member countries and partners of the Organization for Economic Co-operation and Development (OECD) demonstrates that “[…] rising inflation is a global phenomenon,” and that the culminating effects of inflation are not unique to the United States. Many economists predicted the 2021 rise in global inflation due to longer term variables, including housing shortages, climate change, and government deficit spending. The 2022 invasion of Ukraine by Russia further exacerbated the situation by driving gasoline prices up. Oil producers experienced record profitability during this time, dissuading them from lowering prices.