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That is 100% normal. Inflation isn't a magic force that is applied evenly to the economy. It is an emergent property characterized by decreased purchasing power
by tootie 4y ago
That is 100% normal. Inflation isn't a magic force that is applied evenly to the economy. It is an emergent property characterized by decreased purchasing power of money. There is a misconception that inflation is caused by a policy or by some other hidden force. It is actually caused by the same laws of supply and demand that govern every other economic calculation. Right now, demand for almost everything (including labor) is very high and supply is very low. Conversely, the supply of money is high. So prices and wages all go up. Currently at different speeds. Energy and food supplies are being pinched by the war in Ukraine which is causing them to inflate faster than other products. Supply chains are affecting imported goods in a lot of places more than domestically produced. Things like food and energy are largely "inelastic" which means that demand can't go down even when price goes up. You can slow down your purchases of new phones or shoes or other stuff, but you can't eat less or stop heating your house. Things where demand is more elastic, you may just see people buy less in response to high prices until it hits equilibrium.