Life Is Going to Be More Expensive Forever, Sorry

The price of essentials like rent and medical drugs will never come down to pre-pandemic inflation levels if corporate greed goes unchallenged.

By Edward Ongweso Jr

These days, it seems like everyone has a few important questions on their mind: Is the economy still in the gutter? Or are things getting better? Does inflation mean prices will stay high forever, or will these prices eventually come back down? 

There’s been some developments that suggest good news is around the corner. A version of the Build Back Better agenda was passed—significantly pared down but still, passed. Hundreds of thousands of jobs continue to be created each quarter, and the Inflation Reduction Act (IRA) was passed. Finally, inflation in key sectors has begun to cool off.

That last point is key, especially if your wallet has been feeling pinched as prices have skyrocketed over the past year. Data released on August 10 shows that inflation is still elevated but falling—from June to July, the CPI's rate of increase went from 9.1 to 8.5 percent. Still, with supply chain crises linked to COVID-19 shutdowns and Russia's invasion of Ukraine, prices are likely to continue to inflate. 

“Since WWII, we haven't seen prices across the board come down in a sustained way—when prices rise, they tend to stay high”

This raises the question of when—if ever—prices are going to come down to pre-pandemic, let alone pre-inflation levels? According to economists Motherboard spoke to, they most likely never will if corporations are left to their own devices.

"Big corporations know that consumers will be forced to put up with higher prices, especially for necessities like housing or gas that people cannot live without. Since WWII, we haven't seen prices across the board come down in a sustained way—when prices rise, they tend to stay high for long periods after the initial price hikes,” said Dr. Rakeen Mabud, chief economist and managing director of policy and research at the Groundwork Collaborative, in an interview with Motherboard.

On the day the August inflation report was released, Groundwork published a report showing that rent inflation was just one of the concerning areas that would persist at great cost to everyone. Rent, which makes up about a third of the CPI, accounts for a major driver of inflation and is important for a few reasons: not only can it not be cut down like other expenses and hikes can drive people into homelessness, but the CPI consistently underestimates rental inflation because "it doesn't factor in rising prices in new rentals and leases" nor does it capture regional variation or rental increases since the pandemic began, according to Groundwork. –VIC