We all knew inflation was coming—but don’t freak out—it’s only temporary. There were signs of inflation as lumber prices were going up, when car rentals were nowhere to be found, and when grocery bills were coming back higher than expected.
What’s Causing Inflation?
During the pandemic, we were all holding our breath. Millions were unemployed or furloughed, and thousands of homeowners were in forbearance. Renters were one court case away from being evicted—many still are. The future looked bleak, and people withdrew into their homes to focus on DIY home projects.
During this period of deep introspection where we were all stressed and wishing that life could go back to normal—we were making plans. We were scrolling through old posts on Instagram travel accounts, pining for the day where we could travel during the summer with our families again. And I’m glad to say that that summer has finally arrived.
Now that summer’s here, we’ve all been bowled over with the sheer demand for everything. People want homes, they want cars, they want to take that once in a lifetime trip to Hawaii—because if there’s one thing we’ve learned—the unexpected can happen at any time.
Pent Up Demand Lets Loose
In fact, this Spring in Hawaii, rental cars were so expensive (about $700 a day for a Toyota Camry), that tourists started renting U-Haul trucks to drive around the island of Maui. Due to global supply chain shortages, prices for other goods have gone up temporarily. As demand has peaked, manufacturers have a hard time keeping up.
A lot of this has to do with how companies and restaurants had planned out their logistics to meet their supply and demand. Restaurants and car manufacturers had anticipated fewer sales with people working remotely and not traveling. And as we all know, short supply and high demand are the two ingredients you need for inflation.
Why There’s No Need to Worry
In the long run, this temporary inflation is a good thing! Remember how demand for oil fell during the months of April and May in 2020? Gas prices, which are a huge indicator of how our economy is doing, fell below two dollars a gallon—two dollars. That was during the height of unemployment, when we were all so unsure of what was going to happen, that we caused a toilet paper shortage, stayed home, and watched in confusion as our kids bought ring lights and downloaded TikTok.
Now that we’ve recovered a large part of our workforce, and vaccination efforts have made it safer to go out, consumer confidence is soaring like never before. Naturally, the disruption across supply chains will cause a little discomfort before the world returns to normal. But temporary inflation is proof that the global economy is coming back stronger than ever.