I did a quick google and it said because demand is out stripping supply for goods and services. I would have thought supply and demand was never static at any time. Why is it a massive issue now? Supply and demand of what exactly? I understand food price going up but how does that relate to the value of currency? If a recession hits us will it cause inflation to go down because people aren’t demanding as much? Do more people have more money causing higher demand? Thanks for your expertise
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It’s essentially the same reason as the rest of the world. For the past few years, production of things and services was significantly reduced, due to lockdowns, people being sick and not working, etc. At the same time people were given practically “free” money to cover the loss of income, among other reasons.
So people had the same amount of money to spend, but the world had fewer things to sell because fewer things were made.
A simplistic model could be that previously we might have had 10 laptops in the world and 10 people who can afford laptops.
Now, due to reduced production, you only have 5 laptops in the world but we still have 10 people who can afford laptops. A seller of laptops might realize that if he raises the price of laptops by 20%, there will only be 5 people who can afford a laptop. The result is then that the seller still sells all the laptops, but they also earn 20% more.
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