ArticlesBlog

Inflation explained

Inflation explained


We talk about inflation all the time at Marketplace. It’s basically a way of tracking how much things cost over time. From the food that we eat, the stuff that we buy, the energy we use, and the services we use. Inflation is a collection of measurements. The one we’re usually talking about is the Perhaps the easiest way to think of it is to compare it to a basket. Say you’re shopping in the grocery store. You grab some milk, grab some eggs, and grab some bread. You go to the register, it costs x amount of dollars, you’re done. The next month, you go back to the store. Again, you grab some milk, which went up a little bit, you grab some eggs, which went up a lot, and then you grab some bread, which thankfully got a little bit cheaper. Depending on whether that grocery bill went up or down for the total, and by how much — that gives you an overall rate of inflation. And growing inflation isn’t necessarily bad. There’s a few ways inflation can go up. Here’s one… Maybe workers at a car assembly plant get a raise. Since they’re making more money, then the labor costs to make that car go up, so the cost of the car goes up. That factors into higher inflation, but those workers are spending more money in the broader economy. And let’s say wages go up across the country, and everyone has more money in their pocket. and everyone has more money in their pocket.
Then they can all rush out to buy Then they can all rush out to buy more cars, TVs, clothes, more food. Without more production of goods to match that demand, that increased demand can push up prices, and therefore inflation. But inflation isn’t always about wages. Sometimes it’s about the unexpected things. What if there’s some disease that really hits dairy cows and all of a sudden, there’s a lot less milk available, but the same demand? Prices up again and inflation up again. Inflation is just one of several measures of the economy, and the Consumer Price Index is just one measure of inflation. It doesn’t tell us everything we need to know about what’s happening in the economy but it gives us some really useful info that helps paint a larger picture of what’s going on and why you’re paying that 50 cents extra for that gallon of milk.

Comments (9)

  1. Give me a break…prices go way up more than wages, as well as what is expected of the laborer. And this has been going on for decades (I'm talking since Reagan). Those going into the jobs these days don't even have a clue or a memory to compare, so they think this is the way it is and life as usual. Just because unemployment is down doesn't mean a thing. Now everyone in the family, including kids, has to work. Even kids need to get a part time job to get their extras in life. Before a man could support his family. Those days are gone with the family structure. In the old days it wasn't all Leave it to Beaver and Brady Bunch, but it wasn't this crappy either. Thumbs down because this explanation sugar coated this topic.

  2. Inflation is a direct result of increased money supply.

  3. What if the cost to borrow money goes up? And what if taxes go up? Wouldn't that lead to more inflation?

  4. 1913 wasn't a very good year. 1913 gave us the income tax, the 16th amendment and the IRS. — Ron Paul

  5. Thank you so much for the simple clear but super informative video!!

  6. Jesus… This video is 100% bullshit… Inflation is bad ! It is the result of the governement printing money and fractionnal reserve banking… For those who doesn't get it, if you have X amount of $ on a account and the inflation for the year is 2%, your money also loses 2% in purchasing power. Keynesian stupidity…

  7. Yeah, bozos, a pay raise doesn't trigger inflation.

  8. Don't forget shrinkflation.

  9. This CPI seems like a horse-shit way to measure inflation. maybe its just me.

Comment here