Duquesne University Economist Explains Inflation
PITTSBURGH (KDKA) - What really is inflation?
The price of just about everything is way up. Ava Ely said her last several trips to the grocery store have cost her about $50 more than usual.
"I'm just a little upset. I'm like, 'okay, I'm spending all this money on my daily stuff.' So, if I want to come big shopping, if it's a holiday or something, I'm expecting to spend twice as much," she said.
But what's behind these expensive prices? We hear the word inflation, but what does that really mean?
"It's the average price that matters. So if you see the average price going up over time, that's inflation," said Dr. Antony Davies, an associate professor of economics at Duquesne University.
According to Davies, some of the high prices over the past month are directly related to inflation, but they have more to do with oil and the ongoing crisis in Ukraine.
"Any time there are countries involved in military conflict who export oil -- Russia is a major exporter -- it creates lots of upset. And when you get lots of upset, you get prices rising," he said.
"You go to the grocery store, you see goods on the shelf, much of the price you see is due to the fuel that it takes to get the goods to where they end up so when the price of gas goes up, prices of all sorts of other things go up as well," Davies said.
Eventually prices and your receipts will go down again. But there is a floor for just how low prices can drop, and that is where inflation really comes in.
"We've been seeing, over the past year, annualized, about an average of 8% inflation. The last time we saw inflation of that magnitude for that span of time was the late 70s, early 80s," Davies said.
Davies anticipates the U.S. will continue experiencing inflation on an annual basis for years to come and says an end to the rising cost of living hinges on the federal government and deficit spending.
