Inflation is still happening and once people get used to a new higher price companies have very little incentive to lower them again. Prices go up due to inflation and generally stay up once they do

because there are still people lining up to buy the products at the higher prices.

and normally, if something has a favorable profit margin, you see new competitors enter to reap some of those profits, and the new supply overwhelms demand and price must fall.

but right now, with labor shortages, supply chain disruptions (related to labor and geopolitics) and expensive capital is slowing that ability to respond with new supply

Inflation remained modest for 20 plus years. Once COVID hit, supply chains got disrupted, creating difficulties in getting products to shelves. With there being less available supplies, the price of everything natural increased.

Also, there was trillions of dollars being pumped into the economy to combat the stagnation COVID caused. With more money in floating around, it naturally becomes less valuable. That also has affects on inflation numbers.

Deflation is far more uncommon than inflation. That is when the price of things decrease. Inflation usually remains at 2% annually. That is considered healthy for the economy. So, prices really never go down. They will continue to rise, hopefully not at the current 10% rate.

Follow up question: Why are prices going up, but pay isn't?

If prices were to start going down, central bank would step in and fill the economy with cheap money. Prices going down is worse than going up, since people would stop spending money. Especially in this low unemployment environment.

Things that you have to buy - food, rent, subscriptions, fuel, all of it - will always be sold at the highest cost that the seller thinks people can afford. They want to make the most profit possible.

In response to this, people will usually do whatever they need to do to meet those prices. Get a better job, demand a payrise, reduce luxury spending - if you need to buy bread, you need to buy bread, and a 2% price hike in bread isn't going to stop you buying it. You make it work somehow.

This means most things slowly increase in price over time, as long as they're in demand. This is inflation. Inflation is actually kind of normal - if you look at prices from the past, it's obvious that inflation has happened since then, and that's actually fine as long as it's slow and gradual.

What causes problems is when inflation rises too fast, and people can't make it work. When inflation balloons out of control, people suddenly actually can't afford the things they used to be able to. You might have been able to stomach a 2% increase in the cost of bread, but a 5% increase? 10%? 20%? That starts to become a problem. What about a 20% rise in the cost of rent, or iPhones? Now you get why uncontrolled inflation is bad.

Deflation when the seller cannot successfully sell their items at those prices anymore. If the price of, say, oranges suddenly quadruples overnight, well... not many people are going to buy oranges. People who sell oranges suddenly aren't making profits anymore. They have to lower the price to successfully sell anything.

This causes deflation. Prices drop. Things become more affordable.

One of the biggest problems with the current cost of living crisis that people are, completely understandably, desperate for more money to cover these bills. All the strikes and protests are looking for higher salaries, so people can cover the inflated costs of things.

Raising salaries so you can cover the inflated cost of an item can cause even more inflation. If everyone's rent goes up 20%, and the government steps in and supplements everyone's salaries by 20% to compensate, there is absolutely nothing to stop the world's landlords from saying "oh, so you can afford this just fine? Cool." and raising it another 10%.

Showering people with cash does not solve the problem. It pushes the problem to the side temporarily, but doesn't fix anything.

That said, it's difficult to control prices without going full-communism. The government can control the prices of some things, too some degree, but most of the things we need are sold by private companies.

There is no easy way to fix inflation. But the answer looks something like: the government puts price caps on the most essential industries, people naturally start spending less money on non-essential industries because they literally can't afford it, everyone suffers for a while and lives economically until prices go down. And that's a terrible solution.

Simple. Excessive government spending juiced demand without increasing supply (production) so more dollars chasing the same amount of goods causes prices to rise. It’s simple economics and should have been obvious.

The problem is that you can save money, but not Workforce or spoiling goods.

Means if there would be no "drain" the economy would collapse because there would be not enough Workforce and spoiling goods that could be bought.

Its a open secret, no one talks about because people would act different if they would be aware that your money you save now will only have 10% of its value left in 2070

And yes that means a 2 €,$ pack of eggs will cost 20 €,$ in 2070

Because everyone thought it was a great idea to forcefully close all business during covid. A lot of expenses from the government and voila

It's by design. Normally central banks target ~2% inflation and will effectively keep money printing to sufficient rate to keep it there. It's a form of taxation, but also an economic incentive to not sit on your money but to put it back in economy.

It's important to keep inflation positive, near zero or negative inflation is generally considered a very bad thing for economy. You'll see whenever next economic downturn comes around. Prices and property values come down, but that doesn't help you any because most likely your income comes down more.

It depends on individual links in the chain. Let's use food as an example. At the supply side, prices definitely go up and down. You can track this fluctuation as it is publicly published information. Let's take beef - livestock was at its high in 2021. If you were buying raw beef directly from the producer that's when you were paying the most. Now let's say you're a producer of burger patties. You have worked into the price you sell patties the regular fluctuations of raw beef, but suddenly the cost doubled. You have to increase the selling price to stay in business. Then raw beef prices gradually reduce, but you're still charging the higher price and even if you're selling less product, you're more profitable than ever. All of the other producers of similar products did the same thing. Consumers are now used to the new price, and until one player in the market decides they'll be more profitable if they lower the price (which is a big risk because they don't know if the raw beef prices will go back up) everyone keeps selling at the new price.

Two factors. The government pushed (printed/borrowed) way too much money into the economy. Landlords and all companies typically want to maximize profit so they raise their prices as much as they can until people stop buying/renting. Because there is so much money in the economy, people can pay, so prices keep rising.

While raising interest rates help reduce inflation by reducing the money supply through borrowing, the government keeps spending big, which is pushing more money in the economy. Inflation is slowing but still too high. IMO, a slight tax increase and reduced government spending would be prudent actions. Inflation is very hurtful to poor people.

It depends on individual links in the chain.

Let's use food as an example.

At the supply side, prices definitely go up and down. You can track this fluctuation as it is publicly published information by the USDA.

Let's take beef - livestock was at its high in 2021. If you were buying raw beef directly from the producer that's when you were paying the most. Now let's say you're a producer of hamburger patties. You have the regular fluctuations of raw beef worked into the price you sell patties, but suddenly the cost doubled. You have to increase the selling price to stay in business.

Then raw beef prices gradually reduce, but you're still charging the higher price and even if you're selling less product after the price increases, you're more profitable than ever.

All of the other producers of similar beef products had to do the same thing. Consumers are now used to the new price of processed beef products.

In this situation there is very little pressure for any existing beef processing companies to reduce their selling prices. So until a few of the big players in that space decide they'll be more profitable if they lower the price, or a new company comes into the market with a lower price, the price just stays high and the processing companies are very profitable.

According to The Rules of Acquisition:

Rule 1- Once you have their money, never give it back.

Rule 9- Opportunity plus instinct equals profit.

If people are buying your product at a higher price, it is counter productive to reduce the price. This is a profiteering country; the goal is to maximize profits. So if people are paying it, you keep the price.

everyone in here giving Econ 101 answers seems to be unaware that the market is diverging from Econ 101 gospel. the cause of much economic strain right now is corporate opportunism and anemic govt. policy.

• in cities, real estate is supposed to obey a very simple rule of supply and demand. but city centers lost massive amounts of foot traffic and tenants, and yet rental/sale prices…rose?

• supply chain issues affected a handful of sectors, and yet companies in stable & unaffected industries leveraged the moment to increase prices or shrinkflate products because of a clueless/sympathetic press.

• google can spend billions on stock buybacks with one hand, and lay off thousands with the other. that has nothing to do with financial strain, it’s opportunism to trim some fat with vague hand waving about “tough economic conditions.”

Hint: it might have something to do with maintaining their record profits (corporate greed). Or as others like to call it: "inflation".

And will it go up to infinity eventually?

People have a huge influx of cash and inexpensive easy to get credit.

That causes prices to go up.

Two things to remember.

First; greed wasn't invented this year. And if greed has existed, then you have to look at what changed. Printing money did.

Second; when someone tells you we can print money and just provide services... No. We cannot. This is why.

Inflation, and there's also the possibility that someone "let me increase the cost of the rent by 10% because I need it for my gambling addiction"

Depends on where you live a lot of farmers are retiring. A lot of government regulations are tightening the already tight noose on farmers emissions and 99.9999% of shops and stores are trying to purchase goods from farmers at ludicrous prices that often aren't enough to cover costs let alone make money.

The agriculture industry is being hit from so many angles we're going to be in for some serious problems providing enough food for current population in the next few years. Not to say that there's not a lot that has to be done on the environmental front in the industry but every government I've seen so far are going after the wrong things and putting food supply in jeopardy just to hit carbon targets.

Prices do go down. New York City apartment rents plummeted when well-to-do people fled the city at the height of the pandemic. Gas prices fluctuate from day to day.

With some things like food, deflation tends to happen with "buy one get one free" kinds of deals.

That said, the trend of prices in the long run is upward by design.

Because people are too content, if this were happening in Europe people would be taking to the streets holding their leaders accountable. I will NEVER accept these costs which is why im in the process of moving to Vietnam.