US Inflation Assault... Even $1 Pizza Faces Extinction Threat

Price Increase for New York's Famous $1 Pizza
Inflation Hits 30-Year High, Raising Interest Rate Hike Possibility
Strong Dollar and Rising Rates Shrink Carry Trade
Domestic Capital Outflow Cannot Be Ruled Out

[Asia Economy New York=Correspondent Baek Jong-min, Reporter Jang Se-hee] "The $1 pizza is disappearing in New York City."

The daily New York Post recently focused on the price increase of $1 pizza in New York City.

2 Bros Pizza, a $1 pizza vendor, recently raised the price of a slice to $1.50. The surge in ingredient and labor costs has changed the long-standing $1 price tag that symbolized the store. A restaurant official explained the reason for abandoning the $1 price tag, saying, "The prices of all ingredients such as flour, cheese, tomatoes, gloves, paper boxes, and labor costs have skyrocketed."

The price of garlic has risen 400% compared to a year ago, flour by 50%, and tomatoes by 76%. The gas used to bake the pizza also surged by 20%. It is fortunate that the cheese price only increased by 10%.

Both consumers and restaurants are dissatisfied. A customer of 2 Bros Pizza expressed concern, saying, "The inflation is frightening. Eventually, all restaurants will raise their prices." A pizza shop owner honestly confessed the reality that forced him to raise prices through Facebook. He said, "I immigrated here 30 years ago, worked hard, and sent my three children to college, but the American Dream no longer exists. The times are wrong."

Although the U.S. economy has recovered and wages have risen, inflation, which surged 6.2% in one year, is damaging the U.S. economy. Real wages have actually decreased because wage increases have not kept pace with inflation.

Discontent is directed at U.S. President Joe Biden. In a Washington Post-ABC News poll released on the 14th (local time), President Biden’s approval rating was 41%, the lowest since his inauguration. The disapproval rating reached 53%.

The highest inflation in 30 years is signaling an early interest rate hike. Jerome Powell, Chair of the U.S. Federal Reserve (Fed), announced tapering (reduction of asset purchases) this month but emphasized that strict conditions would be set for raising interest rates, yet market concerns are growing.

Chain reactions are continuing in the financial markets as well. Amid the continued strength of the U.S. dollar, the dollar carry trade?borrowing dollars to invest in emerging markets?is rapidly shrinking.

The Bloomberg Dollar Carry Trade Index has fallen by 4% over the past two months, the largest drop since March last year. This means that the possibility of profiting from carry trades has decreased due to the rise in the dollar’s value and interest rates. Bloomberg reported that investors who engaged in carry trades just two months ago, anticipating Fed’s stimulus policies, are now bewildered.

Oh Chang-seop, a researcher at Hyundai Motor Securities, said, "The continued dollar strength and won weakness should be seen as negative because investment funds may flow out of the domestic financial market. However, since foreign exchange gains are significantly increasing, it could act as a positive factor in the export sector."

This content was produced with the assistance of AI translation services.