TROY, Ala. (TROJANVISION) — Inflation is affecting millions of people in the United States, but do people know what inflation is and what they could do to protect themselves from it?
John Dove, an economics professor at Troy University, says there are two ways in which inflation can be talked about.
“It’s the general rise in the overall price level, so it’s a situation where prices, kind of on average, from one year to the next, increase,” Dove said. “Another way to think about is it’s a general decrease in the purchasing power of the dollar.”
So, how does inflation affect the average person?
Dove says inflation can make it more difficult for households to live.
“[It] can make it more difficult and expensive for households to be able to buy the typical goods and services they need, especially if wages aren’t rising to meet that increase in those prices,” Dove told TrojanVision.
Dove explained how inflation can affect households by explaining a scenario that some people may experience during a high inflation period.
“If I earn $100 this year and everything that I have to buy costs me $100, a year from now if those prices go up to $105 and my wage doesn’t change, then in a way, I’m actually five dollars poorer,” Dove explained.
There are many factors that can affect the United States’ inflation rates. According to some experts, the Israel-Hamas war could cause inflation rates in the U.S. to rise.
Dove thinks it is too early to make that assumption.
“If [that] were to expand to a more regional conflict, which is something that a number of people are worried about, if that was the case, then I do believe that [that] probably would have an affect on oil prices and a number of other prices for other resources and commodities,” Dove said.
Dove says the best way for people to stay up to date and educated on topics like inflation is to research and read things that some may find difficult to understand.
For Troy University students, Dove says the Principles of Microeconomics and the Principles of Macroeconomics are good classes to take for any students interested in learning about how certain finance topics can affect the economy.
Dove also suggests people read about inflation on Investopedia.com.