eli5: Since inflation pushes the price of items up every year, does that mean we’re eventually going to get to a point where it’s normal to pay like $20 for a carton of milk?

Question

eli5: Since inflation pushes the price of items up every year, does that mean we’re eventually going to get to a point where it’s normal to pay like $20 for a carton of milk?

In: Economics

Answer 1

The overall answer is yes, but the complicating factor is that different goods experience inflation at wildly different rates. Goods that require more “people” involvement tend to be experience more inflation, while goods thay require less “people” involvement experience less.

Assuming milk is in the latter category, it may take quite a bit longer to hit that price than overall price levels would indicate.

A good example of this is the TV market. TVs are insanely cheaper than they were in the 90s, even ignoring huge jumps in quality and screen size. TV prices have gone down even as overall price levels have gone up.