Assuming inflation is looking at years over year, really aren’t we paying way more than that looking back to 2020? Because prices rose a lot in 2021 and 2022 due to shortages, or lack of workers, supplies, and businesses closing, etc. I think people in general are dealing with way worse inflation because it’s compounded, no?
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Inflation doesn’t affect all goods equally. Its a very complex answer that gets into demand elasticity, but the short version is that some goods suffer from inflation more than others do. When we report inflation, it is a weighted average of a basket of goods we select to calculate the _aggregate_ inflation number.
What goods you choose to select can impact your end-inflation calculation.
u/Ansuz07 answers your main question very well: inflation affects different types of goods differently. For example, if you look at electronics, you see that the inflation rate is 4.6%. Food and beverage is up 7.6%, and transportation is up 21.1% (mostly due to gas prices). Different indices average different sectors.
As for inflation relative to 2020, no, it’s not really worse at all. Although *some* prices rose due to shortages, the market in general was in a bit of a recession. Overall, the inflation rate from 2020 to 2021 was only 1.23% — *lower* than it is most years.
Inflation might be defined as a measure of the general increase of the price of all goods. Practically speaking, that is IMPOSSIBLE to measure in any complex economy. Instead there are proxy measures like the CPI or PPI etc that use different methodologies (like a basket of goods) to give a proxy to inflation.
Inflation is usually quoted (at least in the layman publications) as an annualized figure and, yes, it compounds like any annualized rate of change figure.
Inflation numbers look at monthly year-over-year stats, so Mar 22 vs. Mar 21. yes, there might have been additional inflation relative to Mar 20.
Inflation doesn’t impact all good the same. Something in short supply and high demand might see huge increases — at the peak, lumber was up 7x year over year. Other items might remain flat. The reported inflation numbers look at baskets of goods, but some remove highly variable priced items like gas, some might remove things like housing, etc.
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