The Fundamentals of Inflation: Supply and Demand

Most people sort of understand inflation: prices are rising, cost of living is more expensive, your dollar doesn’t go as far. And that’s true! But what’s behind that phenomenon? That’s when explanations start to peter out. Fortunately, we know someone who is super knowledgeable about inflation Cadence Bank’s Corporate Treasurer Tell Alessio. On this episode, Tell explains the forces that govern inflation and the theory behind it all: supply and demand.

Supply and demand are foundational concepts across economics, but when you apply them to inflation, you get a much clearer picture of our current situation: its causes, its consequences and, potentially, its conclusion. We’ll dive into how supply-driven inflation differs from its demand-induced counterpart, and why one is more stubborn than the other. Plus, the surprise beneficiaries of the past six months, the limits of wage inflation and the credit shift that can protect your business.

Tell Alessio makes history as our first-ever repeat guest, back by popular (supply and) demand! In this episode, Tell tells all! Don’t miss it!

Highlights:

• Consumer Price Index & the metrics we use to measure inflation (2:18)
• Healthy inflation (4:12)
• What constitutes inflation (6:23)
• What’s causing our current inflation: supply or demand? (7:32)
• Supply-driven inflation (7:58)
• Rising labor costs & wage inflation (9:50)
• Pandemic stimulus and demand-driven inflation (12:15)
• Why demand-driven inflation sticks around longer (13:35)
• The people who benefit from inflation (14:57)
• Sectors hardest hit by inflation (17:57)
• Converting floating lines of credit into fixed lines of credit (19:16)
• The next 12-18 months (20:45)
• Keep an eye on consumption (21:34)

Links:

• Cadence Bank Website
• Cadence Bank Twitter
• Cadence Bank LinkedIn
• Tell Alessio LinkedIn
• S&P CoreLogic Case-Shiller Home Price Index
• New York Times - Consumer Demand Has Been Key Driver of Inflation in the US
• Federal Reserve Bank of San Francisco - How Much Do Supply and Demand Drive Inflation?

Feedback:

If you have questions about the show or topics you'd like discussed in future episodes, email our producers, sheena.cochran@cadencebank.com or danielle.kernell@cadencebank.com.