COLORADO SPRINGS, Colo. (KRDO) - Wednesday the Bureau of Labor Statistics revealed inflation has jumped 7 percent in the last year, a pace not seen since 1982.
The pandemic still has a hold on global business: supply chain bottlenecks, employee shortages, online shopping, all continuing to affect prices.
“It’s multifaceted, that's a part of the problem," said Tatiana Bailey, Director of the University of Colorado - Colorado Springs Economic Forum. "And that's much of the reason that I've been saying for a year and a half now that inflation is going to be persistent. There are just too many factors at play here."
The price of inflation can be found everywhere from your fridge to the gas pump. Eggs are up 11 percent, and meat increased 15 percent. Gasoline has risen 50 percent over the last year, and even housing itself is up 5 percent, though it's even higher in some areas around Colorado. So when can we expect some relief, if any?
"If we can burn through the omicron mutation quickly, and there isn't a chance for another mutation to manifest and really take hold, then I think, knock on wood, we may see the end of this pandemic," said Bailey. "And that alone will make it that much easier because now you start talking about a virtuous cycle of people being able to go to work, businesses can stay open, growth, and so forth."
The Federal Reserve has signaled it will raise interest rates as soon as March. But will it make a difference, and is it even a good solution?
"The Federal Reserve is going to have to increase interest rates for the obvious reason of inflation, but it's going to have to do it very slowly," said Bailey. "I think you do one rate hike, you wait, for some data, then you think about maybe a second or third one. It's a tightrope of not wanting to raise it too much, too quickly."
Over the next few months, we'll gain more clarity as to what will happen to inflation, but Bailey insists these high prices won’t last forever.
"How long will these levels of inflation last? You know, that's up for debate," said Bailey. "I've always been in the camp that it's going to take longer than we would like for it to normalize. But inflation does kill itself eventually. First of all, the Federal Reserve steps in, and even if it's going to hurt some, it does have a contractionary influence on growth as a whole. But then the other bigger side of it is the simple fact that consumers start to pull back on their purchases."