I thought there would have been a huge impact on currency exchange rate but nothing dramatic seems to happen to now, why is that?
Note: Sorry for unclear title but due to the rule I can’t make the title related to what I want to mention to. And also I couldn’t find any eli5 related to what I’m looking for.
Edit: solved, thanks everyone!
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Sorry have you seen the prices of steel and timber?
Consumer goods prices usually increase pretty slowly, so it’s not very noticeable. If it was, we’d have big problems. Inflation panic can quickly spiral out of control. Some products have been artificially inflated in price due to sudden skewing of their typical supply/demand. Those products, like construction materials, will come back down in price as supply chains return to normal. But they will probably still be a little bit more expensive than they were 2 years ago, due to the genuine inflation that occurred during that time.
It has happened and it keeps on happening.
A popsicle that costs 50c today probably cost 30c 5 years ago.
Think about something pretty simple you used to buy as a kid; a can of Coke, a popsicle or whatever.
The current talk in the US about minimum wage is evidence of inflation – wages have stayed put, but prices have soared and people can no longer afford to live.
If you’re talking about *hyper*inflation, where prices start running away and things may cost something else week to week, that does happen somewhat frequently and I believe its happening now in Venezuela. It could possibly happen in a developed economy. We haven’t seen it in recent years, but that doesn’t mean it’s impossible.
Inflation only effects the exchange rate if you have high inflation in one country but not the others. Currently every nation is the same boat – everybody has economic impact from COVID, increasing oil prices and reduced international travel.
Also the Federal reserve and it’s equivalents overseas have still been keeping interest rates tightly controlled which is a direct feeder to general inflation.
So what we are seeing at the moment is that we have prices going up in certain sectors while salaries are not, but inflation is measured as a basket of goods but people’s consumption has changed since lockdown – also incomes have been supplemented with government grants. This all paints a very complex picture but basically food prices have gone up, electronics prices have gone up but rents have been frozen (or not gone up as much as they normally would).
Inflation calculations can hide certain increases like for instance the latest iPhone costs more, but less people are buying the latest iPhone.
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