TAMPA — Economists nationwide are keeping a close eye on inflation and how it’s impacting prices.
“Everyone has seen and realized the 10 consecutive increases and interest rates that the Fed has made since March of 2022 and that’s affecting businesses and consumers alike. So that’s a big one and it’s going to be with us for a little while,” said Robert Hooker, Professor of Supply Chain Management at the University of South Florida.
The primary drivers of inflation have been housing, food, and energy. All of those have one thing in common: they’re necessities.
“If a producer can increase the price and keep it there, and they can keep it there because they know people are going to buy it regardless of what the price is, then they’re going to do that,” said Michael Snipes, Associate Professor of Instruction in Economics at USF.
Price increases have put a historic strain on consumers.
“With inflation where it is, we’re also seeing consumers spend less now on things like furniture and appliances and electronics because the cost of funds is higher than what it once was,” said Hooker.
Inflation peaked last summer at a 40-year high and has slowly come down with rate hikes from the federal reserve.
“We’re already seeing inflation numbers start to come down across the country and in the Tampa Bay region,” said Snipes.
Although inflation has cooled some, the prices of many things are still rising.
According to a recent report, prices for energy and goods and services have increased, while grocery costs have gone down a little — a slight relief for consumers.
Still, concerns linger about a potential recession before the year ends.
Economists are now tracking what will happen this summer.
“We’ll see what the fed does in regards to interest rates. They may raise them again; they may kind of keep them high until inflation subsides. That’s going to impact again consumers and businesses alike. Any extra cost that’s incurred by businesses, a lot of that is absorbed by consumers ultimately,” said Hooker.
In terms of the supply chain, a lot of it is industry specific with how the cost trickles down to consumers, but one common aspect is labor.
Experts believe the labor market is starting to look much better.
“If we see an increase in labor market participation and decreases in unemployment, that’s kind of the best-case scenario for labor markets and that’s exactly what we’re seeing now,” said Snipes.
The Fed's next policy meeting is in June, when leaders could discuss whether or not to implement another rate hike.
