Inflation isn’t the only culprit for high prices
May 19th, 2006 | by mbhunter |It’s easy to pin rising prices on the effects of more dollars chasing the same goods. In its simplest form, inflation is just an increase in the money supply.
This MSN article talks about recent sharp rises in prices:
Inflation’s rising toll on consumers
The recent inflation figures made investors run for cover, selling off the major indices sharply.
Just by itself inflation isn’t really that great, because it indicates that your dollars are worth less than they were before. But it’s probable that rising prices are partially because of rising real energy costs. Not only does the price of energy (fossil fuels and most of all oil) go up in real terms when there’s less available, the price of everything else goes up as well! If this real cost continues to rise, people will be spending a larger and larger part of their income for fuel, electricity, and just about anything they buy.
This point is mentioned in the last line of the article — and I agree that it’s definitely not a good thing at all.
Are you feeling the pinch with higher prices? Canceling your summer trips?
