Inflation 101: Understanding why prices go up

The views expressed in this article are those of the writer and not necessarily those of Breaking Belize News.

By Charles Leslie Jr: Inflation is when the prices of things we buy, like food, toys, or clothes, go up.

Before I get started, this article is about inflation in general, and not specifically about Belize.

Why I say this?

I pull from the descripts of Mr. Chayefsky: the world’s economy is ebb and flow, tidal gravity, it is ecological balance.

We must remember that we are just a tiny part of a planetary system of systems.

One vast and immense, interwoven, interacting, multivariate, multinational dominion of goods, services and dollars.

That…is the natural order of things…

That is the atomic and subatomic and galactic structure of things today.

Let’s dive in…

Imagine you had a dollar, and you could buy an ice cream for $1 yesterday, but today the same ice cream costs $1.10. That’s a 10% increase.

Crisco went from $12.95 to $20.95. That’s 61.8% increase.

Red & White Creamer went from $3.95 to $4.75 that’s 20.3% increase.

This means that the price of these products has gone up or increased, and that’s what we call inflation.

There are many reasons why prices go up, like when there are too many people who want to buy the same thing, or when it becomes more expensive to make the thing.

Unfortunately, in Belize, there are more and more people who want to buy the same things, and we import almost everything we consume, so we have little control over production costs.

Tourism is bouncing back fast in Belize, making the demand for many consumer goods go up.

Tourism bouncing back also means that more and more people are going back to work, and re-opening their businesses, and even new businesses are coming online.

And these people are borrowing from banks and other lending institutions…and they are dumping that money into the economy…buying those same goods and services that more and more people are buying.

It’s important to understand inflation because it affects the cost of living and how much things cost.

Also, government spending can have an impact on inflation, for example, the 10% salary reinstatement created an influx of disposal income…which people spend mostly on consumer goods and services.

It’s worth noting that inflation is a complex and multi-faceted phenomenon that is influenced by a number of different factors.

The specific factors that are affecting inflation can vary depending on the country and the current economic conditions.

Generally speaking, there are several measures that governments can take to try to control inflation:

1. Monetary policy: Central banks can adjust the supply of money in the economy and control the interest rates, which can have an impact on inflation. By decreasing the supply of money and increasing interest rates, central banks can reduce demand and slow down price increases.
2. Fiscal policy: Governments can also reduce inflation by controlling their spending and balancing their budgets. By avoiding excessive spending and keeping public debt under control, governments can reduce demand for goods and services and help to keep prices stable.
3. Trade policy: Governments can also influence inflation by implementing trade policies that increase the supply of goods and services. For example, lowering tariffs on imported goods can increase the supply of products and help to reduce prices.
4. Price controls: Governments can also set price controls, which are legal limits on the prices of certain goods and services. Price controls can help to reduce inflation by preventing prices from rising too quickly.

It’s important to note that while these measures can help to control inflation, they also have trade-offs and can have negative consequences.

For example, reducing the supply of money can lead to lower economic growth, and setting price controls can lead to shortages of certain goods and services.

As a result, governments must carefully balance their inflation-fighting measures with the needs of the economy.

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