Inflation is a problem that, for now, cannot be solved and is affecting more and more countries and segments of the economy.
The general rise in prices is serious and has an impact on families and companies, hindering growth and, as a consequence, increasing poverty levels.
A report made by the Family Economy Institute studied the effects of inflation on households in the United States and found that the rising cost of living has been a major cause of financial hardship.
Inflation causes the prices of essential goods and services to rise, which has left families with no margin for expenses other than priority ones.
As their consumption patterns change, as they are forced to choose between spending money on essential items like food and rent, sales of lower priority items collapse.
The report also says that companies have been adjusting their marketing strategies to accommodate the new scenario. Companies now offer a variety of discounts and coupons, but give up profitability, which in the long run impacts the drop in employment and investment.
Inflation shows no signs of abating in Europe
At the end of 2022, inflation was expected to cease to be a problem in the first months of this year in Europe, but things are not happening that way.
This Tuesday, February 28, European stocks fell after the publication of inflation data in France and Spain, higher than expected.
This increased investor uncertainty regarding the pace of interest rate rises as a macroeconomic strategy of the most important central banks.
According to data released this Tuesday, inflation in France was 7.2 percent annually, measured in February 2023, 0.2 percent more than 7 percent in January.
Economists had predicted no change.
In Spain, meanwhile, prices increased by 6.2 percent in February Interannual), more than the 5.9 percent that had been annual inflation in January. The forecast was much lower: 5.5 percent in February.
The big question is to know what the central banks of Europe will do with inflation.
Most likely, they will continue to raise interest rates to “soak up” funds and prevent further warming of the economy.
The problem is that this strategy “cools off” consumption, generates a drop in activity and causes an increase in unemployment.
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