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Can you please reword/ rephrase these bullet points. Typically, higher inflation is caused by strong economic growth. If Aggregate Demand (AD) in an economy expands
Can you please reword/ rephrase these bullet points.
- Typically, higher inflation is caused by strong economic growth. If Aggregate Demand (AD) in an economy expands faster than aggregate supply, we would expect to see a higher inflation rate. If demand is rising faster than supply this suggests that economic growth is higher than the long run sustainable rate of growth.
- For example, in the UK, the long-run trend rate of economic growth is around 2.5%.
- Inflation- or the rate of change in prices over time- is not a simple phenomenon to measure or intercept. Inflation that is persistently too high can hurt the wellbeing of households, especially when it is not offset by comparable increases in wages, leading to reduced buying power. But inflation that is persistently too low leaves monetary policy with less scope to support the economy and can be a sign the economy is below its capacity, thus with room to expand jobs further. Indeed, one piece of important context around the current inflation risks is that inflation was generally weaker than the Federal Reserve's target over the decade prior to the pandemic as the economy recovered from the Great Recession. Overall inflation, as defined by the Personal Consumption Expenditure (PCE) deflator, then fell further during the pandemic, though there have been important differences between products and sectors.
- Persistent challenges in getting goods from factories to customers continue to drive up the price of cars, computer chips, furniture and other products, pushing up consumer price in December at the fastest rate since 1982.
- The Consumer Price Index climbed 7 percent in the year through December, and 5.5 percent after volatile prices such as food and fuel were stripped out, data released Wednesday showed.
- The price of used cars and trucks surged 37.3 percent in the year to December, while food grew 6.3 percent and apparel rose 5.8 percent. Increases in the cost of energy and rent also drove price increases.
- The Omicron variant is infecting workers at factories, ports, trucking companies and warehouse and leading to further shortages of some products and parts used for making goods. Strong demand from American consumers also continues to elevate shipping prices and fuel price increases for a variety of products.
Thank you!
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