May 28, 2024

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The Legal System

Who is Responsible for Inflation in the USA?

Attributing the onus of responsibility is nothing short of solving a murder mystery when it comes to inflation. The USA has seen a 7.7% rise in prices over 2021. The prices of certain consumer goods and health insurance have gone up even further. At this juncture some fingers are being pointed. While those leaning towards the right opine that its the student loan forgiveness and the stimulus cheques handed out by the state that is feeling inflation, the left oriented people think it’s the war in Ukraine, increased fuel prices and corporate greed that’s pushing the prices higher. Which one is it then? 

Corporations have registered record profit in the first two quarters of 2022 with profits rising by 6.2% while the third quarter saw a meager fall of 0.2%. With the corporations constantly complaining about rising cost of raw materials and supply chain, such growth in profit does smell funny. The key to this mystery probably lies in the fact that a lot of these corporations haven’t increased worker wages in concurrence with the rising prices. But that points at another mystery, why would an employee accept such treatment in a market so full of opportunities. The answer lies in the extra-wage perks – flexibility of work, remote work, and other facilities. Add to that the consolidation of companies which has decreased competition.

The corporations do have a strong defense – the cost of raw material and wholesale goods has actually increased by 8%. Moreover, blaming corporate greed for inflation is like blaming gravity for a plane crash. By nature a business tries to charge as much as it can for its products or services. It would seem that some responsibility rests with the consumer as well.

Despite the rising prices consumers have kept the demand solid, in some cases with borrowed money. The debts have been steadily rising. As a countermeasure, the government of the USA has been gradually increasing interest rates. It’s a matter of time before demand stalls and the recession finally hits.