What Is Causing Inflation and How Does It Affect Your Vacation?

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If the year 2022 had one theme, it would be inflation. It is pervasive, and prices are much higher for many items. The cost of filling your car with gasoline is higher. But inflation is also making your vacations more expensive.

Inflation is the highest in four decades. One must go back to the early 1980s for a time when inflation was more elevated, and prices rose at a faster rate. Many young adults don’t remember a time of high inflation because it has been low for many years.

That fact, combined with other forces like deregulation and increasing global competition, has kept prices relatively low for years, at least until 2021. Since then, travel costs have been rising for various reasons. Overall, factors outside of your control are causing inflation to rise, and in turn, it is making the cost of your vacation to Jamaica or other places soar compared to 2021.

What Is Inflation

The simple definition of inflation is the rate of price increases over time, causing a loss of purchasing power and increased living costs. For example, the average price of one gallon of whole milk was $3.04 in 2019. By 2021, the average price had risen to $3.55 per gallon.

Inflation is usually reported as an index value relative to the past year affecting an entire country’s economy. In the United States, it is measured by the Consumer Price Index (CPI) or Personal Consumption Expenditures (PCE) Price Index.

Causes of Inflation

Now that you know the meaning of inflation, we need to know what is causing inflation. Prices usually go up over time, but they can fluctuate and even come down depending on supply and demand. Again, the concept is relatively simple.

First, if demand exceeds production, the price goes up. For instance, during the COVID-19 pandemic, consumers started buying used cars, and prices rose because the supply of used vehicles was limited.

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