RICHMOND, Va. — Ever since the global reopening of the economy following COVID-19 lockdowns, supply chains have had a tough time keeping up with demand.
The pattern has led to an increase in prices for a majority of goods including food, clothing, and gas.
As inflation shows no signs of letting up, the Federal Reserve is taking action to attempt to slow down economic growth.
After a brunch with friends Wednesday, Danielle Dunn-Ridgill spent the afternoon strolling through Carytown.
Noticing that menu items are getting more expensive, she's committed to living by a simple motto.
"I'm boujee on a budget," she said.
She said she got plugged into a social circle through a Facebook group of the same name and has talked with her friends about how they can budget and save money.
"I was just telling some of the girls that I was at brunch with about the 'Buy Nothing' groups and how much they love to just give stuff away for free," Dunn-Ridgill said.
She explained she's also keeping track of how much she travels amid rising prices at the pump.
“I live over in the Midlothian area, so since I came out here today [Carytown], whatever I can do on this side of town today, this is last time I'm coming out here this week," she said.
David White visited Carytown with his girlfriend Wednesday to shop for a suit for an upcoming wedding. He said he's baffled by rising prices as well.
“The inflation of just about anything that you do in life has been kind of crazy," White said. “I've got to be careful with how much I eat out for lunch."
As a car salesman, White has mixed emotions about Wednesday's announcement from the Federal Reserve to hike interest rates.
“There are people that come in and can't get 0%, and they'll walk right out," he said.
And increased rates will affect many more people than just those buying cars.
"Do you have money, and do you spend money? If the answer is yes, then the Fed changing the cost of money which is the discount rate, the base interest rate it charges, is going to touch you," Bob McNab, an economics professor at Old Dominion University, said. "You can't escape the Fed's policy decision."
The Fed approved a 0.25% increase to interest rates marking the first of several more hikes to come in 2022.
The goal is to combat inflation stemming from the pandemic which has been heightened by the Russian invasion of Ukraine.
“Prices are increasing. There's too much money chasing too few goods. How do you take money out of the economy? You make money more expensive. How do you make money more expensive? You have banks charge more for money," McNab said.
Essentially, McNab said the move aims to discourage people from borrowing money which would lead to a drop in demand.
“Very simply, if you have a mortgage that has a variable rate, if you have a credit card which has a variable rate, if you're going shopping for car, if you want a business loan, all costs of that will increase in the coming months," he said.
McNab expects the Federal Reserve to increase rates by one percentage point by the end of the year but believes the decision should have come sooner.
"I would have preferred the first set of interest rate increases back in the fall of last year when we saw prices start to increase in the summer," he said.
Meanwhile, shoppers like Dunn-Ridgill said higher interest rates are okay with her for now.
“If we all collectively deal with the higher rates now to be able to not have to pay as much later, then people learn from it," she said.