WXYZ-TV: Matthew Roling on inflation ties to economy reopening

According to statistics from the Organization for Economic Cooperation and Development, in April of 2021, annual inflation increased sharply in the U.S. to 4.2 percent, up from just 2.6 percent in March. Gas prices have also jumped from June of 2020 to June of 2021 by roughly a dollar for several reasons. Finance professor Matt Roling with Wayne State University breaks down what is fueling it all. "It’s easy to forget the fact a year ago, the cost of a barrel of oil was actually in negative territory. When the world shut down in March or April, the price of a barrel of oil dropped to the floor. As demand for everything from cars to airfare, to cruise lines picks up, the price ... for a barrel has spiked,” said Roling. And overall, he says inflation is tied directly to the economy re-opening: more stimulus money in people’s pockets and limited supply. “As the economy begins to reopen, we see the supply of things like homes, cars, lumber, airfare get squeezed as supply races to catch up with demand.” Roling says expect high gas prices to last at least for a few more months, with more people choosing to drive to summertime destinations, rather than fly.

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