The ongoing conflict between the U.S. and Iran has led to the Strait of Hormuz being closed for nearly six months — a vital trade route for products like oil, natural gas, and fertilizer.
Economists say the longer the strait remains closed, the more disruptions we'll see in agriculture, manufacturing, transportation, healthcare and the production of other consumer goods, driving prices up for consumers.
That, in addition to the ongoing trade dispute between the U.S. and Canada, President Trump's tariff policies, cuts to food assistance and the expiration of Affordable Care Act tax credits have all helped push inflation above the Federal Reserve's 2% target.
Healthcare costs
Gbenga Ajilore, Chief Economist at the Center on Budget and Policy Priorities, told NTX Now's Miranda Suarez and Ron Corning that when the ACA tax credits expired, Texans had to make some difficult decisions.
"People are either spending more on healthcare or dropped it altogether," he said. "It's going to be hitting a lot of people, especially in rural communities."
185,000 Texans lost their healthcare coverage as a result of the ACA tax credits expiring, but Ajilore said it's not just individuals who will be affected.
"That health coverage also helped a lot of hospitals, particularly rural hospitals, with their financial viability," he said. "Now we're going to start seeing closures or drops in services, like OB-GYN services, and that's where the impact's going to hit.
Wage growth
Ajilore says while inflation drives up prices, wage growth is not keeping up.
"What we've seen since April: the inflation rate has exceeded average wage growth," he said. "That means people's purchasing power has been declining all throughout the summer."
To combat inflation, it's likely the Federal Reserve will soon raise interest rates. Ajilore says that will impact nearly everyone.
"We're looking at mortgages, we're looking a credit cards, we're looking at auto loans," he said. "Things are going to become more expensive for people through borrowing."
Ajilore said there's no quick fix for inflation, but rather than looking at how to bring prices of consumer goods down, he thinks the focus should be increasing wages.
"What I would focus on, are things like the minimum wage, things like making food assistance more affordable," he said. "You know, better jobs and better economic development and working on the community."
Miranda Suarez and Ron Corning are the hosts of KERA's NTX Now. Got a tip? Email Miranda at msuarez@kera.org or Ron at rcorning@kera.org.
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