When they say inflation is 7%, is that just compared to items one year ago?
Now that we’re in a new year, shouldn’t there be a sudden reset in inflation being 2-3% again?
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When they say inflation is 7%, it means that the general price level of goods and services in the economy has increased by 7% on average compared to the previous year. This is usually measured using a basket of goods and services that represents what a typical consumer might buy, and the price changes of these items are tracked over time.
Inflation is not necessarily reset to 2-3% at the beginning of a new year. Inflation is a persistent and ongoing phenomenon that can be affected by a wide range of economic factors, such as changes in government policies, shifts in consumer demand, fluctuations in global commodity prices, and more. While inflation rates can fluctuate from year to year, there is no inherent reason why inflation should be “reset” to a specific level at the start of each year.
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