Inflation is a negative phenomenon since it deters the economy from natural growth. Therefore, you might want to contact Skillhub experts for resume advice to switch careers and earn more money to maintain the same lifestyle. However, not everything is as easy as it sounds. This issue is one of the reasons why so many businesses fall into bankruptcy. Hence, there is a chance that employers might not be able to offer you a salary higher than your current one.  

Inflation is a decrease in purchasing power. It is a rate of prices drastically increasing over a certain period. You might have heard phrases like ‘the monthly inflation is 2%’ or ‘the annual inflation has reached its peak.’ This means that your cup of coffee that used to cost $1 now might cost $1.02 or $1.20 in case of a 2% or 20% more, respectively. If inflation is so easy to determine, so are the factors impacting it. Let’s see what causes this problem.  

To the laymen as most of us are, inflation is the inability to buy goods and services for the same amount of money we used to before the price increase. In other words, you need more dollar signs to buy the same goods you usually buy. Yikes, meet your worst nightmare – the culprit of your grocery basket getting smaller and your bills being way over the top.  

Learn more about fiscal policy and how the government controls it. Most importantly, find out how inflation impacts your current job search and market. 

What Are Some Factors That Influence Inflation 

  • Demand for goods. There is a simple rule in economics: the higher the need for goods is, the higher the prices will get. Call it a capitalist principle or basic survival, the desire to get rich is embedded in our genes; 
  • Cost for production. Let’s say the price of your favorite coffee beans increased because a tornado destroyed half of the Columbian plantations. The demand for the beans will rise, causing the plantation to increase the prices for coffee beans due to resource scarcity. Further, your favorite coffee shop will raise the cost of your coffee drink to keep their finances in balance; 
  • Current money supply. Counterintuitively, printing more money leads to inflation. Therefore, the government implements policies to keep the relative value of a currency unit stable.  

More factors cause inflation, but the ones above are the core to remember. With so many factors to consider, how does the government regulate inflation?  

5 Ways the Government Regulates Inflation 

  1. Monetary PolicyBy increasing interest rates, the government increases mortgage rates, which, in turn, leads to high mortgage payments. In this case, saving looks more attractive to households, yet they spend less. Meanwhile, high-interest rates mean decreased borrowing by businesses. Hence, companies will be less interested (pun intended) in investing in business due to high-interest rates. As a result, the economy gets ‘frozen,’ meaning inflation drops once the buyers and sellers get non-active. Ironically, low economic growth equals low inflation.  
  2. Fiscal PolicyThe most unpleasant policy which, fortunately, the government rarely uses in the modern world. This policy implies increasing the tax rates and cutting government spending. As a result, the demand is low, yet the economic growth is low too. However, the most vulnerable population suffers the most in this scenario because the need to pay higher taxes comes with no support from the government.  
  3. Price Control PoliciesNot the most popular policy in the capitalist world, where the power of corporations is boundless. Introducing a price control policy means introducing a benchmark in pricing. Remember that example with your favorite coffee? If a price control policy is introduced, you’ll be happy to learn that the coffee at Starbucks won’t ruin your budget. Unfortunately, that is not the reality nowadays, though hypothetically, this is an effective policy to prevent a recession.  
  4. Exchange Rate PolicyIf the financial situation gets out of control, the government might implement an exchange rate policy to suppress inflation growth. This is done to save the currency from falling while still keeping it competitive. If you know Margaret Thatcher, you might remember horrendous inflation rates emerging in the 1980s. Though Britain joined the European Exchange Rate Mechanism, it couldn’t keep inflation under control.  
  5. MonetarismIn short, monetarism is a system of a monetary policy, a fiscal policy, and the current money supply reduction. All because the fans of monetarism believe that too much money leads to inflation. Yeap, sometimes having less money (printing fewer dollar signs in the government’s case) leads to happier well-being of the national economy. Very ironic but surprisingly true.  

How Does Inflation Influence the Job Market? 

First, let’s learn that the global socioeconomic scene immensely influences the national situation. Russian aggression has impacted the entire world in terms of security and stability. With inflation rates skyrocketing worldwide, let’s check what to wait for when trying to get more interviews.  

  • Remote working. Yeap, we’re all used to working from home. The trend will keep on since most companies will cut their expenses on childcare, transportation, and free lunches; 
  • Salaries and compensation packages. These will rise (especially in the case of non-governmental organizations) but won’t always cover all employee’s expenses;  
  • Budget cuts. There will be less government funding in healthcare, education, and other sectors; 
  • Increased competition. Since some small businesses will fall victim to bankruptcy, there will be fewer job positions. With the number of employees unchanged, the competition for nailing a job will rise; 
  • The Golden Epoch of Freelance. Most companies will hire part-time to cut costs, creating a great opportunity for gig professionals and contractors to secure projects on freelance sites.  

Final Thoughts 

Inflation happens when the money supply growth is higher than the actual economic growth. In this case, the central financial institution takes measures to balance the financial system and slow inflation. The top measures are monetary and fiscal policies, price control, and exchange rate policies. Because of inflation, the cost of living is higher, and the economy can’t grow. In the end, investing in your career during times of inflation is more challenging than in times of stability.  

We hope the article was helpful to you. Good luck!