Local economic expert: No reason to panic about potential for inflation

Local News

AMARILLO, Texas (KAMR/KCIT) — According to the U.S. Department of Labor, the Consumer Price Index for all Urban Consumers (CPI-U) increased in April and has steadily increased in recent months. Now, local experts weigh in on the potential for inflation.

Some consumers might have concerns about the potential for inflation as prices for some goods rise.

In April, the CPI-U increased 0.8% after rising 0.6% in March, according to the U.S. Bureau of Labor Statistics.

However, Associate Professor of Economics and Dana Professor of Business at West Texas A&M University, Neil Meredith, said people should not panic.

The next couple of months are going to be bumpy. We’ll see what happens but I wouldn’t panic about it. I wouldn’t get overly concerned about it.

Neil Meredith, Associate Professor of Economics at West Texas A&M University

Inflation, just a plain speak, is just the overall increase in the price level over time and right now, what we’re seeing going on is, we don’t really know what’s happening with inflation because we don’t really know what’s going to happen with the recovery from a public health crisis that we’re now starting to come out of with COVID-19,” Meredith said.

He continued, “There’s concern that because there’s potential for more money to be circulating and that there’s pent-up demand for things that people didn’t buy…there could be pressure for prices to go up, especially if people are expecting the prices are going to go up.”

Meredith said it is a self-fulfilling prophecy if people purchase more goods, pushing up prices.

“So, there’s a lot of uncertainty in terms of what’s going to happen because we’re in a situation where we don’t really have a track record recently for how something like this might play out on the big macroeconomy scale,” Meredith added.

While more demand can cause prices to increase, Meredith said that does not necessarily indicate inflation. He said the CPI-U is a better indicator of inflation over time.

“We’re sort of in unprecedented territory. I know people keep using that word. It’s overused, but we’re in a situation that’s unique,” said Meredith. “So, you know, the next couple of months are going to be bumpy. We’ll see what happens but I wouldn’t panic about it. I wouldn’t get overly concerned about it.”

He encouraged people to keep an eye on things over the next few months. In the next six months to a year, Meredith said he expects the U.S. to recover more fully from the pandemic, with more people returning to work.

“There could be, over time, some more inflationary pressure, but the Federal Reserve is keeping a close eye on that,” Meredith said. “And if they start to see a number of concerning things, and various different indicators, then they’ll start to pull back on some of the, you know, monetary policy…”

Meanwhile, a local financial consultant is encouraging people to continue to plan for retirement should inflation occur.

“We’re in an unprecedented time. You know, homes are going up, everything’s costing more. You know, a lot of it’s being blamed on the pandemic, but inflation is real,” said Steve Hoyl, Founder of Hoyl Financial, LLC. “We help people with a catch up bucket, because people retire, and they have plenty of money and buying power.”

He continued, “What matters is as inflation erodes that, and it’s going to continue to erode it. Down the road, three years, five years, seven years, sometimes 10 years. They need a catch up bucket, and we help them do that. So they have plenty of buying power. Income is one thing, but how much that buys is what really, really matters.”

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