During a period of inflation prices rise or manufacturers adjust amounts of product consumers get for their money with “shrinkflation”.
After that period ends what happens to prices? Do they drop or do they just continue to increase at a rate closer to the “normal” rate of inflation and never really go back down?
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Very rarely deflation. There’s almost always some inflation over the course of a year. A slight amount of inflation is a actually healthy sign.
They never go down unless there is a period of deflation.
The higher prices just become the new standard. Now, instead of a dinner costing 12$ it’s more like 16-17$, and you have to rectify that with how you get your income.
Now if were talking specifically as with prices being inflated due to corona, the prices should drop down afterwards, as accessibility is getting higher. Its all a question about supply and demand, and right now stuff like timber has a high demand but low supply, but when it changes, the prices will drop again (or should)
I’ve been around a long time and the only thing that brings prices down a bit is competition. Otherwise they stay up. With salaries rising as well as the cost of fuel for transport of goods Employers have to raise prices to make ends meet, this is especially true in the grocery business which works on a very slim profit margin anyway. The folks that get hurt the most are those with minimum or low wage jobs who can’t have or don’t take opportunities to advance to higher paying jobs.
The issue with this “inflation” is that its artificial. Companies made record profits during the pandemic, they gave their CEO’s millions in bonuses, and they still raised the price of goods. Its not inflation its greed.
Inflation rates per country in the G20, over the past two years, has been almost directly proportional to the amount of money printed by the government.
The answer is that deflation is rare, so inflation “normalizes” to a lower rate. Price fluctuations are driven by supply and demand in the short term, but over the long term inflation drives the price of production upward, which raises the demand curve to meet it.
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