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
>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%
But the 2.37% average inflation is a per year average (e.g. 2.37% inflation in 2013, 2.37% inflation in 2014, and so on would mean average annual inflation was 2.37%). So if inflation stayed the same over the next 10 years, the average inflation would stay 2.37% (not increase to 4.74%).
Some inflation is a good thing. It encourages investment because holding onto money just devalues its worth if there is inflation. And yes, bread will probably hit $10-$15 sometime in the future. But wages still also have increased (hopefully by as much or more than inflation).
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