Ugh, inflation.

If you’re anything like me, you cringe at the sight of the word. To me, it means things are getting more expensive and who loves that? No one, especially not my budget.

It’s 2022, we’re entering the 3rd year of a global pandemic, and inflation is the highest since 1982 according to Trading Economics.

You can watch all the news channels, read all the financial news articles, or even talk to your angry uncle about how inflation is out of control because “Uncle Sam is screwing us again”, but after all of that you are left pretty clueless to what it even is and how it might be affecting your own life.

As we dive into how to write about inflation, let’s get clear on what exactly inflation is, what causes it, how it affects you, and who is profiting from all of it.

What is Inflation?

Inflation is a measure of the rate of rising prices of the goods and services in an economy. When prices rise, the purchasing power of your money decreases.

The purchasing power of our dollar goes down because we have to use more dollars to meet those rising prices. Ultimately, the less we are able to purchase with our dollars the more inflation rises.

What Causes Inflation?

There are several factors that can drive prices upward in an economy. Typically, inflation can result from an increase in production costs or an increase in demand for products and services.

Some of the various factors that drive inflation include:

  • Cost-push inflation: When production costs increase due to increase in raw materials or wages, prices for those products or services increase.
  • Demand-pull inflation: When there is a strong consumer demand for a product or service, the prices will increase.
  • The housing market: When the demand for housing increases, home prices will rise.
  • Expansionary fiscal policy: Fiscal policy is how the government adjusts its spending and tax rates to monitor and influence the economy.

How to Write About Inflation?

When writing about inflation, you have to know your audience and who you’re talking to. Inflation has several nuances of impact depending on the sector and personal experience.

It’s best to simplify it down as much as you can when talking to your audience and do so without bias.

To break inflation down in terms that a 5 year old can understand, I spoke with someone who is much more qualified and experienced on the subject, Jonathan Thomas M.B.A., who is a Financial Coach and the host of Money Talks, a YouTube channel that helps folks to turn their financial goals into day to day decisions.

Jonathan simplifies inflation as “Inflation means everything costs more to produce. When I was a kid a cheeseburger cost me 50 cents at McDonald’s. Every year the cost rose on food like bread, meat, cheese, etc. Because the cost to make a cheeseburger went up, McDonald’s had to raise the price. Now a cheeseburger costs $1.59.”

Give Examples in Your Writing, Especially for Those More Complicated Experiences of Inflation

When talking about inflation, it’s best to pair examples and analogies like Jonathan did to help the reader better understand it, how it affects them, and how it might affect those around them.

For instance, an example from my own life is the experience of the rise of housing costs from one end of the country to the other during the height of Covid-19 in 2020 which could illustrate a more complex form of inflation.

My wife and I moved across the country in December 2020 after we both became location independent, meaning we could work from anywhere. We weren’t the only people that did this in the last couple of years.

In fact, 15.9 million people had already moved by the time we did and their decision to move was influenced by the pandemic in one way or another. Some of those people had to move because of rising rent costs and other financial reasons like job loss. Others feared getting Covid-19 where they lived or wanted to move to be closer to family.

This drove the price of housing up and fast.

We moved from St. Louis, Missouri where the housing prices are below the national average, to a small town in Washington state where the housing is much higher. We went from a $100k house to almost a $300k house.

Our real estate broker explained that because so many people in the larger cities were moving to rural areas like the one we were moving to, this sort of mass migration drove the demand for housing up.

At the same time with increasing demand, there was a smaller inventory of affordable housing available and few new building projects for that same category of affordable housing in the area. This created a seller’s market with bidding wars on new available listings sometimes starting as soon as the house was listed.

Folks were buying houses without ever looking at them, waiving inspections, and due to bidding wars would offer sometimes as much as $50k over asking price for the same house you’d find in St. Louis, MO for $200k less.

Jonathan explains that a part of this equation is “Demand increased for real estate so the cost of lumber increased as there wasn’t enough available for everyone to keep building.”

The other part includes the Federal Reserve’s influence on interest rates that kept mortgage rates low during this time as well, surging that housing demand even higher as it meant American’s could secure mortgages at the lowest interest rate in history in December 2020 – 2.68%.

Framing Inflation as Good or Bad

Inflation can be both good and bad. However, how you write about inflation must take into account your reader’s experience with their current financial situation and how inflation might be impacting that experience.

For instance, if you say inflation is good because it means people can make more money and their assets can build wealth quicker, your reader may not resonate with that same perspective.

If your reader had a house in Washington at the height of the seller’s market last year, they would’ve seen that inflation as a good thing for them because it increased the value of their own house. Some folks could sell their house for as much as $500,000 more than what they bought it for.

Then there were folks on the other side of that fence where they were ready to purchase their first home that year, and found nothing they could afford. Or they lost a job and couldn’t afford rent anymore. So, they had to leave their home to move somewhere cheaper to turn around and see the landlord listing their home for half the price after so they could fill the unit with a tenant.

It’s also because of the rate of inflation since then that folks are seeing those same discounted rents, now going back up.

Inflation can be good and bad for everyone. Be mindful of how you frame it to your audience.

Conclusion: How Well Do You Know Your Audience?

When you discuss any sort of financial topic, it is crucial that you know exactly who you’re talking to. People have charged reactions to reading financial content because of how personal and political money is. Charge them up in a positive way, not a negative one.

Start with a simple audience persona which you can use a template like the one found here. Ask yourself what are the most common problems that your audience might have with inflation and then speak to those problems when covering the topic.

If you know your audience, writing about inflation is going to be a breeze.

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