RALEIGH, N.C. (WNCN) – It should come as no surprise to anyone that the escalating price of gasoline in March helped drive inflation upwards.
Although experts believe we’ve hit the peak at 8.5 percent, they warn the economy for the rest of the year will be a lot different as the feds try to slow spending down to control inflation.
In an effort to help drive down gas prices, the Environmental Protection Agency is going to allow the sale of a special gas blend called E-15.
It’s fuel mixed with 15 percent ethanol. Normally it’s not sold during warmer months because of concerns of high emissions, but it’s a compromise to help control prices.
Gas prices aren’t the only concern for us.
Consumer Mike Maley said higher prices for everything means, “less money for other things like long term savings, investments, and things like that, because you are spending your money on essentials.”
An economist with North Carolina State University believes the worst of the inflation may be behind us.
“Likely next month we’ll still see stubborn inflation, but it won’t be as high as 8.5 percent,” said NCSU’s Michael Walden.
For years we’ve been used to no inflation in prices, Even so, to some consumers, this change was no surprise.
“It’s due,” said Vinoo Patel. “We can’t have low-interest rates forever.”
He thinks it will eventually balance out.
To get control of inflation, the Federal Reserve Bank needs to take action.
“They are beginning to enact policies like in the 70s that they need to enact to reduce inflation,” said Walden.
Specifically, he says the fed needs to:
- Continue to raise interest rates
- Pull in the money supply making it less available
“The Federal Reserve is going to put the country on a spending diet,” said Walden. “Their view is the inflation is driven by people trying to spend more than what’s available to spend it on.”
Walden said do not expect inflation to magically go away in the next month or two.
He said we’re going to have to live with attempts to tame it right through early 2023.
Walden says people must be prepared for those changes, which could include layoffs, higher unemployment and a 25-30 percent chance of a recession as the Feds try and bring the economy back into line.