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Your Raise Could Get Eaten Up Next Year Before You Can Spend It

Changes made now can slowly help ensure inflation rates don’t climb to detrimental levels, but it’s multi-stepped, and time consuming.

There have been many factors at play over the last two years that have seriously complicated life: from COVID-19 to really polarizing politics, the bonkers housing market, and an economic freefall from the pandemic has led to lots of struggles trying to make ends meet. Unfortunately, another element is now at play that could impact families again – rising inflation.

According to New York Times, inflation rates have jumped to the highest level in close to 40 years. Data released this week points to rising housing costs, supply chain disruptions, and rapid consumer demand have all led to “fuel the strongest inflationary burst in a generation.”

According to the Consumer Prince Index, the number jumped by 6.8 percent this year through November. It’s the fastest-paced rise since 1982. “After stripping out food and fuel, which can move around a lot from month to month, inflation climbed by 4.9 percent. That was the quickest annual reading since 1991,” New York Times reported.

It’s important to note that the rise in inflation is just one part of a multifaceted national economy. In other words, there have been good things, too — like widespread wage growth and companies offering better pay and job perks to keep their workforce. Workers are looking for better jobs that have an easier work-life balance and many are making more money as a result. However, those gains are being erased by inflation, which is extreme – but hopefully temporary.

The Biden Administration has been concerned about the increase in prices. There have been many issues with the supply chain — the New York Times mentioned used cars and couches as an example of products that increased in price and were hard to find. The pandemic changed lifestyles, which increased the demand for products like these, but factories weren’t able to keep up with the surge because getting parts was a challenge paired with necessary shutdowns to slow the spread of the coronavirus.

That was all somewhat expected, but that was supposed to be temporary issues and that’s not what happened. “Instead, they have lasted for months, as demand for goods remains strong and the virus continues to disrupt manufacturing and transportation,” New York Times explained.

So, what’s next? Inflation needs to be addressed. Unfortunately, there’s no easy or fast fix. Changes made now can slowly help ensure inflation rates don’t climb to detrimental levels, but it’s multi-stepped and time-consuming.

“There is no quick fix. If there were a light switch, we would do that,” Commerce Secretary Gina Raimondo said to CNN. “We all have to be just a little bit patient because we are seeing that the action we are taking is working. We just have to stick with it, you know, long enough to solve the problem.” CNN suggested addressing the worker shortage — one of the biggest driving factors of inflation — with comprehensive immigration reform. They also suggest addressing energy price spikes, collaborating with the private sector market to bring down the supply chain issues, easing tariffs, fighting against price-fixing, and increasing domestic production of goods. And – of course – ending the pandemic.

“Ultimately, what prompted high inflation is what will end it: The Covid-19 pandemic,” CNN adds. “When demand for services returns, workers return to the jobs market, and production of goods ramps back up, some of the factors driving up prices will ease.” So, a real easy fix!