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INFLATION – Did we say [Health Care] Inflation?
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Why? Inflation, which is the rate of price increases over time, affects all of us on a personal level. We pay electric bills, go grocery shopping, decorate our houses, buy cars—and this year all of those things got more expensive. Especially health care.
Thanks to a nefarious mix of soaring demand for goods and snarled supply chains, US consumer prices jumped the most in 39 years in November, and the 6.8% inflation rate marked the sixth straight month inflation grew by 5% or more. Producer prices, which can eventually trickle down to individuals, also increased at their fastest pace on record last month.
Of course, some inflation is good for the economy when wages keep up with rising prices (the Fed aims for a 2% inflation rate over time). But, so far in the pandemic, that hasn’t happened. While many Americans have gotten a raise in 2021, wage gains haven’t been sufficient to offset inflation, resulting in the erosion of purchasing power—especially for folks on a more or less fixed income.
Where do we go from here?
After months of claiming inflation was “transitory,” the Fed has dropped that term and adopted a more hawkish monetary policy to tamp down surging prices. The central bank is winding down its bond-buying stimulus program faster than originally planned, and also plans to hike interest rates three times in 2022.
In its inflation-fighting efforts, the Fed isn’t alone on the front lines. The Bank of England became the first major central bank to raise interest rates during the pandemic in order to combat the biggest annual jump in consumer prices in 10 years. Russia has raised rates seven times this year. Mexico, Chile, Costa Rica, Pakistan, and Hungary are among other countries which are tightening monetary policy to combat higher prices.
Looking ahead…as if economic policymakers needed another inflation curveball, Omicron has taken the mound. Central banks generally don’t expect the new variant to significantly dent economic growth, but they do think it may prolong inflation by exacerbating the supply–demand imbalance that fueled higher prices in the first place.
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RICARDIAN DEMAND HEALTH ECONOMICS: https://medicalexecutivepost.com/2021/12/14/ricardian-derived-demand-economics-in-medicine/
RISING HEALTH CARE COSTS: https://medicalexecutivepost.com/2018/03/11/medical-treatment-costs-becoming-expensive-25-factors/
Elderly CPI: https://medicalexecutivepost.com/2019/06/13/what-is-the-elderly-cpi/
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HEALTH ECONOMICS CITE: https://www.r2library.com/Resource/Title/0826102549
COMMENTS APPRECIATED.
Thank You
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Filed under: Accounting, Breaking News, Glossary Terms, Health Economics, Healthcare Finance | Tagged: chained CPI, CPI, Health Economics, inflation, ricardian demand economics, ricardio | Leave a comment »
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