Inflation In The United States: Why Rural America Is Worried

December 27, 2021 $ by Tonza Borden $ 1 Comment

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Inflation In The United States Is 6.8 On The Richter Scale!

Here’s what inflation in the United States might look like in 2022 at the highest its been since 2008, and why rural areas should worry.

Disclaimer: I am an Amazon Associate; therefore, this post may contain affiliate links for me to earn a commission. RuralMoney.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

Inflation In The United States Is 6.8 On The Richter Scale!

The Types Of Inflation In The United States

Economists use the term “aggregate demand” to describe the total amount of demand in an economy.

Aggregate demand is expressed as the total amount of money exchanged for those goods and services at a specific price level and point in time.

Sometimes the aggregate demand in a country increases too quickly for the country’s production.

Because there is so much demand for goods and a scarcity of goods, prices increase.

This type of inflation is called demand-pull inflation.

Demand-pull inflation is often the result of central banks rapidly increasing the money supply.

Another type of inflation is cost-push inflation.

This type of inflation comes from a decrease in aggregate supply.

The term aggregate supply describes the total amount of goods or services that people are selling in an economy.

When the cost of inputs, which means resources a producer uses to create the final product they sell or wages increase rapidly, cost-push inflation may occur.

Although the inflation rate in the United States is 6.8, this type of inflation is more common in developing countries because they rely too much on international markets.

In fact, countries overseas import most of the resources developing countries use for production.

If a spike in the prices of international goods occurs, a developing country that relies on the goods will experience a severe drop in aggregate supply.

The Consequences Of High Inflation In The United States

A key issue about inflation in the United States is the relationship between poverty and inflation, particularly in rural areas.

In contrast, Zimbabwe and Venezuela have some of the highest inflation rates in the world (2,030% and 747% respectively).

As these are two extremes, the price of goods and services can increase almost about 200% a day.

For example, a gallon of milk: If the milk is $2 one day, then the very next day, the same gallon could be $6.

Similar consequences of high inflation in the United States may have a greater effect in rural areas.

In rural areas, there are more mom and pop variety, convenience or general stores.

They sell general convenience items such as bread, rice and milk, etc.

As a result of cost-push inflation, they are changing prices each week.

For example, the mom and pop owner goes to the wholesaler for supplies.

The wholesaler change the price of the goods that increase by 20%.

Therefore, store owners have to also change prices by 20%.

Unsurprisingly, this upsets consumers.

Consumers may go to the market expecting an item to cost the same as it did last week.

Of course, this is not the case, and they may find themselves suddenly unable to afford the item, which is happening rapidly across the United States.

How High Inflation Contributes To Poverty And Inflation Inequality

Poverty and inflation in the United States have a connection due to the fact that money has value, and its value can grow or diminish.

Poverty is a lack of financial resources, leading to an inability to afford basic needs.

In other words, as the cost of basic needs increases, the amount of financial resources necessary to afford those needs also increases.

That just means your purchasing power has decreased due to increasing costs.

If your income level does not increase at as high a rate as the inflation increases, you will become poorer.
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As it stands right now, the inflation rate in the United States is 6.8!

Poverty And Inflation Inequality

One of the issues regarding poverty and inflation is that high inflation has a disproportionately large negative effect on those struggling with poverty, already.

Inflation inequality describes the disparities between the effects inflation has on middle and upper-class people and lower-class people.

There are multiple reasons why inflation affects people with lower incomes more than those with higher incomes.

One of the main reasons has to do with the types of jobs these two types of people have.

Lower-income people often don’t have much opportunity to negotiate their wages.

When prices rise, wages for these individuals tend to stay stagnant for a while.

Consequently, their purchasing power plummets.