Florida TaxWatch, a non-profit taxpayer research think tank based in Tallahassee, Florida, predicted in one of its latest reports that the runaway inflation facing the United States could subsist by the end of 2022.
“Yet even with inflation reports signaling higher prices on the immediate horizon, there is hope that 2022 will see inflation begin to taper down. According to some estimates, year-over-year percentage increases in the CPI [Consumer Price Index] are anticipated to fall to 4.8 percent by mid-year and then to an even lower 2.8 percent by the end of 2022. In other words, inflation improvement should begin to materialize by mid-2022 and slowly fall closer to a more characteristic 2.0 percent by 2023.”
The report said Florida’s businesses are currently facing the prospect of having to raise prices and Floridians are finding themselves with a lower purchasing power.
“According to the U.S. Bureau of Labor Statistics (BLS), the purchasing power of the U.S. dollar has decreased 6.5 percent in December 2021 compared to the year prior—the largest one-year decrease since 1982,” the report said. “For Florida families residing in low-income and rural areas, these impacts further constrain budgets. Income growth is typically less pronounced in these areas, making it more difficult to adapt to rising prices for essentials like groceries, energy, and gas.”
TaxWatch says when the costs of goods and services goes up, consumers often make the choice to buy cheaper products or limit purchasing entirely. Those decisions would likely impact state revenue, as well.
“Based on Florida TaxWatch calculations, a one percent increase in the price of all taxable goods would bring in an estimated $320 million in additional sales tax revenue for Florida,” the report stated. “This estimate should be viewed with caution however, since it does not control for the adjustment behavior of consumers in response to higher prices over time and assumes a one percent increase in prices for taxable goods directly translates into a comparable one percent increase in tax revenue.”
When asked about Floridians’ hope for reduced inflation rates, TaxWatch cited a Bloomberg article that explained that other economists are projecting the same reduced inflation rates based on the CPI.
“Supply networks are seen becoming somewhat more orderly by later in the year. There’s unlikely to be a repeat of the lockdown-era splurge on big-ticket goods, which sent those prices soaring. Some key commodities including oil are already off pandemic highs, the Federal Reserve is hitting the monetary-policy brakes, and statistical quirks will tip the scales toward lower inflation prints.
“Add all those things together and it explains why most economists project inflation will slow to less than 3% by the end of 2022.”
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Grant Holcomb is a reporter at The Florida Capital Star and The Star News Network. Follow Grant on Twitter and direct message tips.
