Scary this has to explained but this is a good eli5.
Yeah many people don’t realize that inflation is “price increase year over year” and think it means “current price.” Like lowering inflation will make their groceries cheaper
Price decreases are actually negative inflation and have all sorts of whacked out effects on an economy. It was a concern during COVID due to the huge drop in consumer spending forcing some prices to start to decrease.
We need to stop talking about inflation and start talking about how WAGES ARE NOT GOING UP! Greedy corporations are not PAYING PEOPLE WHAT THEIR LABOR IS WORTH!
The problem is WAGE STAGNATION, not inflation.
The problem is both…
Some inflation is a good thing. It keeps money moving, which is absolutely crucial to the system as it is. Wages do need to rise with or outpace it, though.
It’s an issue with how inflation numbers are reported and I continue to believe that it’s done intentionally to confuse people (or reassure them).
It’s reported year on year but people don’t plan their finances year on year, they think back further than the last year so inflation should be reported both year on year and with a reference year.
It’s funny that other economy stats are actually reported in comparison to major events but not inflation. “The economy has improved X% since the 2008 financial crisis!” is the kind of things that’s getting reported, well, inflation should be reported the same way. How much has it increased since January 2020? That’s what people are feeling right now, not the 3% since August 2023.
It’s specially a problem in the US, and other selected third world countries, where they don’t have yearly minimum wage increases to offset inflation. I live in Brazil, and I get a raise that is always higher to the yearly inflation (thanks for my union), so yes, things are higher as ever, but my salary too.
Hey, I was told that everything that goes up must come down. So where the hell is the deflation?
I know this is a joke but deflation can be scary too. Basically if it becomes a pattern then consumer spending will crater since people know if they wait their money will be with more in the future. Obviously this effect is less on stuff people have to buy to survive but it’s still not desired.
Yeah inflation means noone can afford stuff but there is almost maximum employment
Deflation results in a lot of stores shutting down since noone is buying anything anymore
High inflation can mean noone can afford more expensive stuff, too, and that those shut down - but generally it’s a better idea to have a small amount of inflation
It’s almost as if capitalism is unsustainable.
