Experts Believe A Stimulus Check Could Help Rein In A Running Inflation

Stimulus Check
stimulus check

An uncontrolled surge in fuel prices coupled with the rise in prices of all essentials has begun to impact American households hard. While some states have already moved to send stimulus checks to counter the rise in prices, other states are mulling steps to counter it. But experts believe that a federal stimulus check along the lines of the Economic Impact Payment could help at this stage.

Inflation remains high as prices remain 8.5% higher on average when matched with last year. Fuel prices are the main cause of this high rate of inflation, the highest since the early eighties.

The fuel index went up by 18.3% in March alone and was the cause behind the rise of 50% of the rise in household goods.

Companies were forced to pass on the increase in fuel prices to their customers. But all products are not being affected similarly. The consumer index showed a fall of 0.4% last month when food, other commodities, and energy were not included in the average.

Shortage Of Goods Fuelling Price Rise Making The Case For A Stimulus Check Stronger

The Fed Reserve has also said that they would be increasing interest rates in response to the high rate of inflation.

Experts are concerned that even as prices have risen to historical levels, this period is not like other phases of inflation faced in the US. They said that the low supply of goods, especially essentials, and high fuel prices are the underlying causes.

This could lead to another round of inflation. The collapse of the worldwide supply chains has led to a rise in demand that has outpaced the supply rate and caused prices to spike abruptly. This has made the need for another federal stimulus check more necessary.

The disruption in the supply chain was anticipated, but it has proved to be more pervasive than expected. Joseph Stiglitz, the Nobel Prize-winning economist, believes that hiking interest rates by the Federal Reserve would be a short-sighted move affecting people at the lower-income level.