February Inflation Critique

February Inflation Critique By Zach Barrett In the fox business article it talks about current inflation especially in the month of February. It discusses how for the 8th straight month household spending rose. This is true that it has slowly increased but, watch out for the problems that the increase in percent doesn’t take account for. With food and energy prices at an all time high Americans are struggling to pay for these necessities. Inflation of food and energy is a very complex problem to try to fix. One reason is the demand is always going to be high or almost inelastic because foods and energy are seen as necessities. In the 21st century one cannot go without food and electricity in their house. It is products that people will consume to survive in the world today. With prices rising and predictions on them to keep rising has forced millions of families to tap into their reserves or savings accounts to pay for bills and food. In February when this article was published gas was in the low 3 dollar range in Roanoke Virginia. Now it is closing in on 4 dollars and some people predict it to do nothing but increase. This puts another damper on American families without gas families can’t go to work, school, and proceed to do normal activities that one does. With people using their savings and not investing as much simply because they have no extra money is a problem. This can be defined as unexpected inflation. People were not prepared for food prices to almost double or extra money added to their usual energy or electric bill. One example the government could do is to try to enforce more powerful caps to stop the energy companies from going up so much. Without that a person has no option but to pay the bill even if it takes all their savings. Energy is an example of a product that is hard to find substitute products or companies. For example in the city of Salem there is only one place to get electricity and utilities from so their price is what you have to pay. Energy companies are the closest example of a monopoly in the United States. Food prices are hard to control simply because with increases in stuff such as fuel can spark an increase in price. When products get more expensive people have to raise other prices to compensate for it. With inflation rising more than individuals incomes will create a problem in the consumption of spending and saving. It is okay if products increase or inflate as long as people’s incomes rise at the same rate. Even though there was an increase in spending there is still many inflation problems that are hurting Americans making them spend the money they used to plan on saving. http://www.foxbusiness.com/markets/2011/03/28/consumer-spending-rises-07/ Reuters, . "Consumer spending up, inflation accelarates." foxbusiness . N.p., Published March 28, 2011. Web. 11 Apr 2011. .