How can inflation be only a few percentage points and yet many goods and services are up over 50% since 2019?

Question

How can inflation be only a few percentage points and yet many goods and services are up over 50% since 2019?

In: 187

Answer 1

Every single country in the world has a metric called a “basket of goods.’ These are considered to be the things that an average person would buy. The Consumer Price Index does track every single price but when it tells you an inflation number it’s based on pulling based on the criteria of the “average person.” For example the average person doesn’t live off of just flour and milk, so food inflation has to be reflective of the price of meat and the price of lettuce as well.

Because these figures end up being averaged the price of one thing going up heavily doesn’t impact the overall inflation. That individual item has inflated by 50%.