Eli5, Why do people raise prices during inflation?

Question

Doesn’t that make inflation worse?

In: 0

Answer 1

Businesses raise prices because they want money. People raise expected wages because they want money and now the things they need/want cost more.

Goods get more expensive because of this.

*However*, if goods did not get more expensive, then there would be a shortage. Inflation happens when there is too much money compared to how many goods exist, so if prices do not go up then people will try to buy more goods and run out.