In the aftermath of the 2020 global pandemic, inflation has swept across economies worldwide. While economists expected the consumer price index in the United States to rise 5.9% in the past year, it has instead risen 6.2%. This rapid rise in rates is creating a notable impact on food prices. High prices are affecting market sales and charity operations. Responses to the market inflation may either alleviate or aggravate long-term effects on the post-pandemic economy.
Inflation in the face of a post-pandemic market is not unexpected. It is easy to observe this pattern in separate events throughout history. Based on observations in Europe, there is expected inflation after a pandemic, and a deep recession quickly follows. Typically, the trend inflation is the beginning of the long recovery for the economy. However, throughout the COVID-19 pandemic, policymakers worldwide were heavily involved in curbing harmful effects on the economy. Stimulus policies regarding layoffs and rent accommodations may have softened the inevitable economic backlash.
However, many Latin American countries are feeling the effects of the global inflation in the stomachs of their citizens. Rises in food prices by 30% in some areas have left families with even more complicated monetary decisions than they faced before the pandemic. For individuals like Miguelina Espindola, the difference in food affordability has impacted her ability to buy necessary materials to treat her diabetes. Increasing desperation as citizens try to provide food for their families has resulted in spats of violence in some communities. Food prices are estimated to be the highest in a decade. These food prices impacted by inflation, in turn, have raised inflation.
Central banks throughout the Latin American region have reported inflation rates being well above the target rate. Both Brazil and Chile have reported dramatic increases in interest rates that have surpassed all other increases in their respective country within the past two decades. Economists have speculated that these reactions will have long-lasting impacts on the region. From experiences shared by individuals in countries such as Brazil, Chile, Mexico, and Peru, the pandemic has changed the job market within the region as well. Changes within the job market, such as fewer job opportunities due to COVID-19 related deaths, have made it difficult for many families to keep up with the rising prices around them. As work opportunities have decreased ability to provide supplies, the demand for those supplies has only continued to rise.
In the United States, food prices affect how charity organizations and food banks can distribute goods. Due to higher expenses to feed communities, Americans have a greater need for food banks' supplies. However, even food banks have difficulty obtaining the necessary supplies to provide for their patrons. Many food banks are dependent on donations from retailers, but the price increase has led to a decrease in available food. Meat has become increasingly scarce in food banks. Even those supplies not dependent on donations are widely considered out of reach, as the food banks do not have the means to obtain them.
President Joe Biden has proposed spending programs and tax adjustments equating up to $1.85 trillion to offset the dramatic inflation rate. However, there has been some debate amongst economists as to whether this would create the intended effect. While there seems to be agreement that the plan would be beneficial in the long run, there are unanswered questions that may impact inflation rates for 2022. Some economists have expressed concern about adjusting an already record-breaking change in inflation. Others are confident that any effect from the proposed solution would be minor.
Additionally, there has been concern about this solution because of rapid change already present in the economy. Companies struggle to have an adequate number of workers return to the workforce. By September of 2020, there were an estimated 2.2 million fewer women alone in the workforce than before the pandemic. However, demand has not adjusted to the change in labor supply, putting companies in tight spots for production. This problem is similar to the supply and demand complications discussed earlier in the Latin American region. These issues have caused some economists to question whether it is an appropriate time to make further adjustments or if it would be more beneficial to wait for prices to settle before making any more changes.
Success for stabilizing inflation is partially dependent on a few unpredictable factors. For the process to begin, the plan would need to pass Congress. At the time being, there is the uncertainty of this solution being able to pass Congress with the necessary support quickly. However, the timing of this solution's implementation could play a factor in both short-term and long-term results. Perhaps the most unpredictable factor is the reaction of the public. How these spending programs and tax cuts are received may change the spending habits of the general population.
A consistent in every nation is the demand for food. So, it is up to policymakers to determine if further economic stimulus would serve food prices or aggravate the issue. While the fast and hearty responses to complications due to the pandemic may have curbed some negative impacts that could have been, the economy still requires vigilant efforts to maintain affordable prices for the population it affects.