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Why does inflation hit Latinos harder?

2023-04-09T15:00:41+00:00
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  • What is inflation and what are its variants? 
  • Why experts say inflation hits Latinos harder.
  • Is there any good news about the economy for 2023?

Does inflation hit Latinos harder? This is what the financial experts say! According to data from the International Monetary Fund, global inflation could fall to 6.6% in 2023 and 4.3% in 2024, compared to 8.8% in 2022. In 2019, the levels stood at a rate of 3.5%, a figure below what was experienced during and after the pandemic.

In general terms, inflation affects the world’s population equally. However, data shows the finances of Latinos and other minority groups tend to be hit harder by inflation. Learn more about this problem and the forecasts for 2023.

What is inflation?

What is inflation?
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Inflation is defined as the general and sustained increase in the prices of goods and services, something that occurs when money loses its value, meaning things cost more than they used to.

Inflation is caused by different factors — the increase in the amount of money in circulation, a decrease in the supply of goods and services, a higher cost of production, among others, stand out. Inflation makes it harder for most people to pay for what they need and save for the future.

Inflation rates

Economy in 2023
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There are different types of inflation, depending on both its causes and its consequences. For example, demand inflation occurs when there is an increase in the demand for goods and services but the supply cannot keep up, either because of an increase in government spending or in the amount of money in circulation.

Another type of inflation is cost inflation, which occurs when the increase in production costs results in a higher price for goods and services due to prices of raw materials, increases in wages or costs of production import goods.

What are the forecasts for 2023?

Outlook for 2023
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The annual inflation rate in the United States reached 6% in February 2023, representing a slower pace for the eighth consecutive month. This figure is the lowest since September 2021; by 2023, core inflation could be 5.5%.

This seems to be good news, but perhaps not as positive as some expected. According to a Reuters survey, at least 68 market agents say that two more interest rate hikes are expected in the coming months, which will affect the general economy.

Does inflation hurt Latinos the most? This is what the experts say

Latinos and inflation
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It’s no secret that inflation seems to affect minorities, especially to Latinos, more than other groups. This, according to an analysis presented by the Federal Reserve. It found that the majority of Latinos allocate a good part of their budget to buy basic goods that have risen in price, while they tend to allocate less money to services that have not fluctuated much in price, such as health care, entertainment and education.

An alarming fact found by the Federal Reserve is that these economic disparities and effects caused by inflation could be even more serious than those recently reported. In contrast, the Latino community has seen better integration into the workforce after the pandemic, a fact that could benefit minorities and favor a better adjustment to current living costs.

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