EXPLAINER: Why are fears of high inflation getting worse?

WASHINGTON (AP) — Gas prices are rising. Auto prices are soaring. Consumer goods companies are charging more for household basics like toilet paper, peanut butter and soft drinks.

All of which is resurrecting fears of an economic threat that has all but disappeared over the past generation: Runaway inflation. It occurs when prices for most goods and services not only rise but accelerate, making the cost of living steadily more expensive and shrinking the purchasing power of Americans' earnings and savings.

In the past, rising inflation has usually led to higher pay as workers have demanded and received raises to keep pace. In fact, inflation can't really accelerate for long without sizable wage gains. Yet pay raises — if they do occur — typically lag behind price increases, thereby squeezing consumers at least temporarily. And eventually, pay gains themselves will fuel further inflation: Companies raise prices further to offset higher wages for their employees.

Not since the late 1960s and early '70s has the United States endured chronic high inflation, with consumer prices rising at or near double-digit percentages from one year to the next. In fact, the reverse has been true for about a decade: Inflation has remained persistently below the 2% annual target set by the Federal Reserve.

Few economists think the nation is on the verge of uncontrollably high inflation. But worries among businesses, consumers and investors about uncomfortably high inflation are growing.

___

Q. WHAT'S BEHIND THE CONCERNS ABOUT INFLATION?

A. Mainly, it's the fact that prices for so many things are rising and seem likely to do so for the next several months at least. One reason for that is that prices tumbled in March and April of last year, when the pandemic tore through the economy, and...