This thought came to me as I was food shopping. So I know there are things that increase the price of certain items (beer, cigarettes, sugar tax – UK) but they also increase with inflation each year like other foods such as bread.
Apparently, the average inflation raise over the last 10 years in the US is 2.37% as of July 2023. So if it is the same in another 10-years, over the space of 20 years inflation would be 4.74%, if we say inflation is the same? And so on and so on. If it continues wouldn’t prices, for say, bread just end up getting higher and higher and be like $10-15+? And as wages don’t rise with inflation the same way foods do fewer and fewer people each decade could afford it?
Now this is just random thoughts I had when shopping and I am not making any comments on any politics. All I wanted to know is, is my thinking true that prices will just go up and up indefinitely decade-on-decade, why or why not? And I am an idiot so imagine I am 5.
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Edit: Went to sleep and woke up to about 300 notifications, thanks for your explanation to a Neanderthal like myself.
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Inflation is cumulative. Using the US from 2011 to 2020 inflation was 18.7% i.e. what cost $100 in 2011 would cost $118.70 in 2020.
During that same period wages rose – this is a bit of a minefield to work out due to large wage differentials.
As inflation is cumulative, as above, then yes, prices will continually rise.
However! There always is a but isn’t there. Prices can fall due to demand and processes (e.g. Petrol). Prices can fall due ready availability of another resource to process a product (aluminium switching from carbon fuels to electric arc furnaces – in Piccadilly Circus in London is the Eros statue. This is made from aluminium which at the time of commission was horrendously expensive)
Food has generally got cheaper due to fertiliser, strains (“dwarf” wheat returns around 20% more yield than “old” wheat about five foot tall being weather affected)
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