The following comes from a news article I was reading. I regularly have this confusion set in when reading about the economy/inflation etc.
“When she looked at the receipt closely, she was shocked to see that she once paid just $2.59 for two beefy five-layer burritos.
In 2024, just one of those burritos now costs approximately $3.69, though prices differ depending on state.
– In January 2012, the buying power of $1 has the same buying power as $1.35 does as of December 2023, according to the Bureau of Labor Statistics’ inflation calculator.
– At the same time, retail food prices have generally increased by an average of 2% per year from 2013 to 2022, according to the U.S. Government Accountability Office.
– However, inflation has been steadily leveling out, climbing 3.4% in December after the COVID-era recession sent inflation spiking to a 40-year high of 9.1% in June 2022.”
If the price of something has more than doubled, then why are the numbers describing inflation always 1-9%, or $1 dollar in 2012 has the same buying power as $1.35 in 2023? I understand those numbers don’t specifically represent Taco Bell’s food, they’re the nation as a whole, but from Home Depot, to Taco Bell, to the grocery store, to my car insurance, to home prices, to medical care, to tuition, to rent prices, to car prices, everything has jumped so massively, at least these things in my life. Are there other numbers I’m just not aware of? Like I know tv’s have gotten cheaper, but it seems like the things that have gotten cheaper are few and far between, and nowhere near enough to put a dent in how much most everything else has gone up. What pulls these numbers down to 1-9%?
In: Economics
A few considerations to keep in mind:
The annual inflation numbers are just that: annual. So if inflation is 9%, thats an estimated 9% increase from one year ago. Any increases in the next years are compounded on that prior 9% increase.
Also, the inflation number is averaged across almost everything you can buy – some stuff will be much higher, some might have barely moved.
And when citing a specific merchant, there could very easily be some price increases unrelated to inflation, purely for pricing power.
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