If inflation is continuous year-on-year, how does that become tenable over say 100-200+ years

Question

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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In: 4366

Answer 1

You’ve been responding but I think there’s some data you are missing.

Inflation going up year over year is more or less normal. We want a *little* bit of inflation–there’s various reasons for that we won’t go into, but most current policymakers target roughly 2%.

You seem incredulous that bread might be $10 after a while, and the answer is, yes, that’s going to happen–bread was fifty cents forty years ago.

Your other comments seem stuck on wages not increasing, but that’s not true–wages also increase. [See this chart](https://www.statista.com/statistics/1351276/wage-growth-vs-inflation-us/) for recent years. Yes, there was a period where inflation was higher than wages…but also a time when wages were higher than inflation. It’s never going to be exact and there’s going to be lags, but the lags happen in both directions.

[Here’s the real (inflation-adjusted) household income](https://fred.stlouisfed.org/series/MEHOINUSA672N) over time. There’s ups and downs but it’s obviously trending up–and that’s already taking inflation into account.

Edit: I’ve posted enough graphs from FRED. I’ve done my due diligence and I’m not doing your homework anymore. What I said is objectively true and can be verified by literally dozens of sources.