• 3 Posts
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Joined 1 year ago
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Cake day: July 1st, 2023

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  • Yes and no. It’s basically just super complicated and we don’t know how much is each factor. But I would highly doubt that part of the rising costs is not also just because people are still willing to pay.

    At the end of the day it’s supply and demand. And that fluctuates based on so many different things.

    Interest rates being low and money being easy to borrow creates higher demand and will in part cause prices to increase.

    Supply chain shortages create massive demand spikes that can have massive effects on pricing of certain products as the supply chain tries to stabilize.

    The FED can employ quantitative easing to increase money supply and liquidity, which adds to inflation, but increases economic growth (Theoretically).

    Or they can use quantitative tightening to reduce money supply and lower demand, slow growth etc.

    Lastly companies understand how normalized inflation has become and can increase what they charge even if their cost of goods isn’t moving significantly. So there is certainly some degree of this happening.

    Hopefully the market will re-adjust as profit margins change and consumers spending habits fully adjust to the market.

    Basically if everyone re-evaluates what and how they are purchasing, the market has to adjust. If you buy the products you prefer at the inflated cost, companies are not going to lower prices. If you buy budget or off brand items where you can, they will be forced to change their strategy to compete.