Why are prices going up?

Question 1

inflation

Answer 1

increase in prices of things over time.

Now, I’m no economist, but I know this has a lot to do with inflation - the increase in prices of things over time.
Even if you take out some of these volatile items like food and energy, the sustained price increases we’ve had, it is actually getting passed through into how companies price their goods and services.

Question 2

hit in the pocket

Answer 2

have less money to spend.

You mean it’s very important and lots of things couldn’t happen without it. Well, we all need money – but have you noticed how our money doesn’t seem to buy so much these days?
It seems like consumers like us are being hit in the pocket at the moment – and by that, I mean we have less money to spend.

Question 3

volatile

Answer 3

unpredictable and can change suddenly.

Even if you take out some of these volatile items like food and energy, the sustained price increases we’ve had, it is actually getting passed through into how companies price their goods and services.

Question 4

sustained

Answer 4

continues at the same level for a long period of time.

Even if you take out some of these volatile items like food and energy, the sustained price increases we’ve had, it is actually getting passed through into how companies price their goods and services.

Question 5

recession

Answer 5

Another possible consequence of inflation is recession – this economic term describes a situation where a country’s production starts going down, people’s incomes go down and unemployment goes up. This all sounds like a very bleak economic outlook. So, what can be done?

Question 6

effective

Answer 6

works well and gets the best results.

One of them, something that is actually most effective, is by slowing down demand. And if you increase interest rates, what you do is you discourage people from borrowing, whether they are individuals or whether they are businesses - and of course the economy starts slowing down.

Question 7

interest rates

Answer 7

fees banks and financial institutions charge you for borrowing money.

So, she says what is most effective – meaning what works well and gets the best results – is slowing down demand. Increasing interest rates can do this because people will borrow less money. Interest rates are fees banks and financial institutions charge you for borrowing money.