Factors That Affected Inflation Rates for US Consumer Prices

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1 Factors That Affected Inflation Rates for US Consumer Prices Student Name: Institutional Affiliations: Date of Submission:

2 Introduction Inflation is a measure of the increase in the general price level of an economy's goods and services over time. It affects the purchasing power of consumers and has a significant impact on the economy. Understanding the factors that influence inflation rates for US consumer prices is crucial for policymakers and businesses (Ramírez-Aldana et al., 2020). This literature review examines the factors that affect inflation rates for US consumer prices, including the COVID-19 pandemic, semiconductor shortages, non-tariff barriers, power distance belief, and the impact of inflation on construction projects. Spatial Analysis of COVID-19 Spread in Iran: Insights into Geographical and Structural Transmission Determinants at a Province Level The study by Ramírez-Aldana et al., 2020) examines the factors that contributed to the spread of COVID-19 in Iran at the province level. The authors use spatial analysis techniques to identify geographical and structural determinants that influenced the transmission of the virus. They found a significant correlation between the number of COVID-19 cases and the level of economic development, population density, and average household size across provinces. The study also reveals that regions with high levels of inequality and inadequate healthcare infrastructure were more vulnerable to spreading the virus. The COVID-19 pandemic has significantly impacted inflation rates for US consumer prices. The lockdowns and other restrictions imposed to slow down the spread of the virus have disrupted supply chains, leading to shortages and increasing costs for businesses. This has resulted in higher prices for goods and services, contributing to rising inflation rates. The study by Ramírez-Aldana et al. (2020) highlights the importance of economic development and inequality in understanding the transmission of the virus and its impact on inflation rates.

3 Semiconductor Shortages and Vehicle Production and Prices In their study, Krolikowski & Naggert (2021) examine the impact of semiconductor shortages on vehicle production and prices in the US. They find that the shortages have led to a significant decrease in vehicle production and increased costs, particularly for high-demand vehicles. The authors attribute this to the high reliance of the auto industry on semiconductors, which are essential components in modern automobiles. The study also reveals that the shortages have led to a shift in consumer demand, with buyers opting for lower-priced models instead. The semiconductor shortages have directly impacted inflation rates for US consumer prices. With the decrease in vehicle production and the increase in prices, consumers are paying more for a limited supply of cars, contributing to inflation. The study by Krolikowski & Naggert (2021) highlights the vulnerability of industries to disruptions in the global supply chain, which can significantly impact inflation rates for consumer prices. Non-tariff Barriers and Consumer Prices: Evidence from Brexit Bakker et al. (2022) investigate the impact of non-tariff barriers on consumer prices in the UK after Brexit. The authors use supermarket scanner data to track the prices of goods in the UK before and after Brexit and find a significant increase in prices for goods that faced non-tariff barriers. The study identifies stricter regulations, higher administrative costs, and longer transportation times as some of the non-tariff barriers that contributed to the increase in prices. The study highlights the impact of non-tariff barriers on inflation rates for US consumer prices, particularly in the context of the ongoing trade tensions between the US and its trading partners. With increased regulations and administrative costs, businesses may face higher charges passed on to consumers, leading to higher prices and inflation. The study by Bakker et al. (2022)

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4 emphasizes the need for policymakers to consider the impact of non-tariff barriers on inflation rates when making trade agreements. Impact of Inflation Rate on Construction Projects Budget: A Review Musarat et al. (2021) review the existing literature on the impact of inflation rates on construction projects. They find that inflation has a significant effect on construction projects, with higher inflation rates leading to an increase in project costs. The study identifies the main drivers of inflation in the construction industry: labor costs, material costs, and economic factors such as interest rates and economic growth. The authors argue that inflation can significantly impact the profitability and success of construction projects. The findings of the study by Musarat et al. (2021) reinforce the importance of understanding the impact of inflation on construction projects. The construction industry is a significant contributor to the US economy, and any fluctuations in inflation rates can have a ripple effect on other sectors. The study highlights the need for businesses to factor in inflation rates when budgeting for construction projects and for policymakers to consider the impact of inflation on the overall economy. Price No Object!: The Impact of Power Distance Belief on Consumers' Price Sensitivity Lee et al. (2020) explore the influence of power distance belief on consumers' price sensitivity. The authors find that consumers' beliefs about power distance or societal inequality can affect their price sensitivity. In cultures with high power distance beliefs, consumers are likely to pay higher prices for products, even if they are aware of alternatives that are equally or better quality but at a lower price. This phenomenon is referred to as the "price no object" effect.

5 The study by Lee et al. (2020) sheds light on an essential factor that can contribute to inflation rates for US consumer prices. In societies with high power distance beliefs, consumers may be more willing to pay higher product prices, contributing to inflation. This has implications for businesses, as they may be able to charge higher prices for their products in certain cultures, and for policymakers, as they consider the impact of power distance beliefs on inflation rates. Understanding US Inflation during the COVID Era Ball et al. (2022) analyze the trends in US inflation during the COVID era. The authors find that while the pandemic initially led to a decline in inflation rates, they have since risen above pre-pandemic levels. The study attributes this increase to various factors, including supply chain disruptions, shifts in consumer demand, and expansionary fiscal and monetary policies. The authors highlight the role of the Federal Reserve in maintaining low and stable inflation rates during this period of economic uncertainty. The study by Ball et al. (2022) provides a comprehensive understanding of the different factors that have contributed to the fluctuations in inflation rates during the COVID era. The findings highlight the importance of monitoring and managing these factors to achieve and maintain stable inflation rates. The study also emphasizes the role of proactive policies in mitigating the impact of the pandemic on inflation. Conclusion In conclusion, this literature review has identified different factors that have been found to affect inflation rates for US consumer prices. The COVID-19 pandemic, semiconductor shortages, non-tariff barriers, power distance belief, and the impact of inflation on construction projects have all been identified as significant contributors to inflation (Ball et al., 2022). These findings highlight the interconnectedness of various economic factors and reinforce the need for

6 a comprehensive understanding of inflation rates. Future research could focus on the effects of other macroeconomic factors, such as interest and exchange rates, on inflation rates for US consumer prices. Policymakers and businesses can use this knowledge to make informed decisions to manage and mitigate the effects of these factors on inflation.

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7 References Bakker, J., Datta, N., Davies, R., & De Lyon, J. (2022). Non-tariff barriers and consumer prices: evidence from Brexit. Ball, L. M., Leigh, D., & Mishra, P. (2022). Understanding us inflation during the covid era (No. w30613). National Bureau of Economic Research. Krolikowski, & Naggert, K. N. (2021). Semiconductor Shortages and Vehicle Production and Prices. Economic Commentary (Cleveland) , 2021-17 , 1–6. https://doi.org/10.26509/frbc- ec-202117 Lee, H., Lalwani, A. K., & Wang, J. J. (2020). Price, no object!: The impact of power distance belief on consumers' price sensitivity. Journal of Marketing , 84 (6), 113-129. Musarat, M. A., Alaloul, W. S., & Liew, M. S. (2021). Impact of inflation rate on construction projects budget: A review. Ain Shams Engineering Journal , 12 (1), 407-414. Ramírez-Aldana, Gomez-Verjan, J. C., & Bello-Chavolla, O. Y. (2020). Spatial analysis of COVID-19 spread in Iran: Insights into geographical and structural transmission determinants at a province level. PLoS Neglected Tropical Diseases , 14 (11), e0008875– e0008875. https://doi.org/10.1371/journal.pntd.0008875

Factors That Affected Inflation Rates for US Consumer Prices

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