Inflation in Brookings, OR

Jeff Sweet & Lilian King

April 4, 2024

Brookings, Oregon, is a luscious and stunningly beautiful town. The community is very welcoming, and the weather never gets too cold or too warm. 

But one problem is inflation. Sadly, inflation hits Brookings quite harshly. Gas prices rise up and down continuously, and the prices of necessities and utilities go up often. Inflation wasn't as bad in this little town, but ever since the COVID pandemic, it has gotten a lot worse. 

“There is a decrease in customers due to inflation, and then on top of that, I'm trying to maintain the business. It starts out with me and my family, and down to, you know, customers, and my employees,” said Austin, the owner of the 101 Bar & Grill.

It decreases the number of produce or merchandise you can purchase. This makes things harder for small business owners to buy supplies from a supplier. Supplies will prioritize bigger companies that have the money to buy the stocks for high prices. 

Getting the supplies will be harder for them to buy, making some small businesses not make enough and have to close since they do not have the supplies for customers. The interview with the small business owner named Austin is scared of inflation. Inflation affects his business, customers, family, and employees alike. 

This is concerning for Austin because if he loses money, he will have to cut people from his business. Austin might lose customers if the prices are too high, making the goods unaffordable for them. and he might have to close his business if he loses too much money and can’t recover. 

This in turn affects his family that has to use money for things they need like food and water. The prices rising is causing people like him to not be able to afford for their businesses and for their families. 

“The amount of redeemable promissory notes first exceeded that of annual tax revenues. The paper money was still at an early stage and proved to be unstable. Toward the end of the Southern Song, hyperinflation caused by the over-issuance of promissory notes seriously threatened the economy,”  said William Guanglin Liu, an Associate Professor of History at the Hong Kong University of Science and Technology. 

Hyperinflation also happened because it was an attempt to make more paper money as a way to save the economy. “Chinese hyperinflation was basically caused by the Nationalist governments' desperate attempts to finance its mounting war expenditures by printing money,”  said Munir Quddus et al.

Inflation started to get bad in 2022. Inflation got this bad because of two reasons. One bad quantity of goods demanded at any particular price level was rising more quickly than the quantity of goods supplied at that price level. The second reason is that there was more unemployment of people and this made the wages stagnant. 

Inflation has been bad in the past before but the most recent is from four decades ago. Inflation began jumping upwards in the middle of the 1960s. Inflation reached greater than 14 percent in 1980.

“In 2022, the US saw inflation spike to levels not seen in four decades, and the Federal Reserve was in the throes of a historic rate-hiking campaign to cool it back down,” said Alicia Wallace, a Senior Writer for CNN Business. 

During 1960 through 2022, the general inflation rates were 3.8 percent per year. The price increase from that is 903.96 percent. Inflation in 2023 has gone down however. “ For November 2023, the year-over-year inflation rate was 3.1%,” said  U.S. Bureau of Labor Statistics.

What causes inflation to be a current issue in the US now is, “The combination of strong demand and supply chain bottlenecks led to further pressure on prices, particularly on prices of durable goods. Rising prices of food and energy added importantly to inflation” based on what the National Bureau of Economic Research said. Another reason inflation is an issue is because of the supply chain issues, pent-up consumer demand and an economic stimulus from the pandemic.

One of the major causes of inflation is, as the Reserve Bank of Australia stated, “Constant more jobs and higher wages which increase household incomes and lead to a rise in consumer spending, further increasing aggregate demands and the scope for firms to increase the prices of their goods and services.”  

According to the National Institutes of Health, “Lax monetary policy forces an expansion or contraction of the production structure through quantitative models and shallow assumptions.”

The people who suffer and are affected the most by inflation are low-income households, lower-income consumers, or just the community in general; but shop and restaurant owners along with the workers also are affected and suffer. 

How is inflation affecting the community? “Unevenly raising the prices inevitably reduces the purchasing power of some,” the International Monetary Fund said. Inflation is also causing the community to have higher food costs, gasoline costs, and utility costs which means less money for savings and necessities.

The Federal Reserve History says that, “inflation became more of a big problem in the US during 1965-1982, during that time it led economists to rethink policies of the Fed and some other central banks.” The biggest inflation of US history though, was 1917 at 17.84%.

AP News reported that if inflation remains high, it will add pressure on the Fed to raise rates more aggressively potentially inducing a recession. Since inflation tends to reduce the purchasing power, the very threat of any future inflation on the economy can make people quite reluctant to lend for long times. Most economists believe that economist slack is a key fundamental determinant of the inflation rate.

We can decrease inflation for the future by increasing taxes or cutting spending, increasing taxes leads to decreased individual demand and a reduction in the supply of money in the economy. According to Investopedia “Monetary policy primarily involves changing interest rates to control inflation. Governments through fiscal policy, however, can assist in fighting inflation”.

The University of Chicago Booth School of Business said, “It takes time for higher interest rates to raise interest costs, as debt is rolled over.”

Photo Credit: https://theberkshireedge.com/capital-ideas-will-lower-inflation-lift-stock-prices-to-record-highs/