Although the year-over-year inflation rate fell for the eighth consecutive month in January, the consumer price index grew slightly, by 0.5%, from December to January.
With inflation not falling as quickly as the Federal Reserve would like and Consumers still struggling to purchase even the most basic necessities, many are pressing the federal government to consider more stimulus payments in 2023.
More Stimulus Checks May Lead To Higher Inflation Rate
Nearly 62% of Americans questioned approving more stimulus payments this year. However, the federal government has no plans to issue stimulus checks in the near future, and some critics claim that additional stimulus checks will worsen inflationary pressures.
Although advocates of the stimulus frequently assert that inflation checks don’t make as much of a difference as skeptics believe, flooding the country with extra cash may cause inflation to rise too soon. In an interview with Forbes, Nicholas B. Creel, assistant professor of business law at Georgia College & State University, stated that current inflation is being driven by supply concerns and gasoline prices. With relief check recipients typically spending their checks promptly on goods and services, an undesirable aggregate demand is created.
Read more: IRS: How long does it take to receive a tax refund?
Are Americans Getting Used To Free Money?
With demand already high, stimulus payments may not benefit households who are paying more for items as a result of the aforementioned inflation.
Dr. Jaime Peters, assistant dean and assistant professor of finance at Maryville University, believes that extra stimulus expenditure may exacerbate and prolong the problem of inflation.
According to Jonathan Wolff, professor of economics at the Farmer School of Business at Miami University in Ohio, the process of leveling supply and demand relies on attempts to raise production, maybe by temporarily lowering company taxes to make local enterprises more competitive. He also took a firmer stance against government payment freezes.
Read more: Marburg virus outbreak: Authorities rush to test vaccines; Why should I be concerned?