Inflation, and How Did We Get Here?

In 2021, inflation has risen 5.4% across all indexed goods according to the Bureau of Labor Statistics. Between August and September, food and shelter accounted for over half of the month-to-month increase. Here is what is interesting:

From a month to month perspective, we have already passed the peak inflation rate. Let’s look at 12 month trailing:
Despite the fact that inflation may have plateaued coming into Q4 2021, we should explore what caused the surge of inflation in the first place.
You’re reading that right. Wages are downwardly suppressed while inflation is rising. This is a particularly nuanced scenario where we expect the cause of inflation to be too much money chasing too few goods; but how could this be when average wages have declined?

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