What's The Deal With Inflation?

📆This Week’s Topic

In this week’s edition of Friday Finance, we’ll be talking about inflation. We’ll dive into how current events such as the conflict in Iran are affecting the inflation rate, and in turn how that will influence prices and consumers. We’ll also focus on how policy is being dictated by inflation, and what the government can and can’t do to mitigate rates.

💳 The Issue

Inflation is defined as the general increase in prices of goods and services over time. However, the rate at which the prices rise can be determined by different factors affecting the market. For instance, with the war in Iran disrupting supply chains, last month, prices in the US rose at the fastest rate since 2023. More specifically, energy costs rose due to the Strait of Hormuz being blockaded. Now, gas, fertilizer, air travel, and products from industries with high energy costs such as manufacturing are starting to have higher average costs.

📊 How Does This Affect My Wallet?

In May, the inflation rate climbed to 4.2%, and is being driven by rising oil, gas, and energy prices. The national average for gas now is $4.50 a gallon. The higher prices tend to affect lower income households more, and this fits in the “K-Shaped economy” model that economists are using to describe the current market. (Lower income households struggle more, while high income homes thrive.) For people who frequently drive, the higher costs at the pumps can have an immediate impact. An Uber driver named Danielle Sollers went from paying around $25 per fill up to more than 40 dollars per trip to the gas station. On a larger scale, some experts say the price per barrel of crude oil could reach just under 170 dollars, which would mean around $5 per gallon of gas.

🔚 Outcome

Due to the ongoing war, prices have continued to rise, and so have inflation rates. It’s expected that inflation rates will stay high until the end of 2026, and lower in the years following. In addition, due to a strong job market, businesses have some wiggle room to raise prices, meaning that with tariffs and inflation and price hikes, prices for goods such as sports equipment and apparel, as well as fuel and grocery costs could rise even more. For instances, in addition to higher gas and fuel costs, the price of tomatoes has risen by 40%, and the apparel and sports equipment have grown 4.2 and 3.9 percent in 2026. Overall, it’s expected that the inflation rate will rise even more. Executives at the Cleveland Federal Reserve Bank on average predict that the inflation rate will move along at just under 4%, which is the highest predictions have been since Trump’s tariffs of last April.

⏳ Final Summary

Prices are rising and will continue to do so, it seems, through the end of 2026. Consumers aren’t happy with the state of the economy, nor the presidents economic policy. And last month, the average hourly earning grew around 3.6% from last year. This means that prices are rising faster than wages, it seems as if those who make the least are hit the hardest by rising costs. The economy is struggling, and it’ll be intriguing to see if it can make a comeback by the end of 2026, or in a couple of years.

🙏Thank You & Important Information

As always, thank you for reading this week’s edition of Friday Finance. If you enjoyed this article of enjoy news about finance, consider subscribing, or reading our other articles.

Best,

Grayson Stein and Jacob Gans