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Yes, prices can rise broadly due to oil prices rising, but they come back down when oil prices drop. And the price rise isn't because the currency is less valu
by refurb 4y ago
Yes, prices can rise broadly due to oil prices rising, but they come back down when oil prices drop.
And the price rise isn't because the currency is less valuable, so its not the type of inflation that concerns economists - the kind that drives consumers to spend rather than save or invest.
Just like the converse - if energy costs dropped due some new technology, it’s not deflationary (each dollar is worth more than before).
- Nursie 4y ago> And the price rise isn't because the currency is less valuable > Just like the converse - if energy costs dropped due some new technology, it’s not deflationary (each dollar is worth more than before). If the price of everything rises or falls, the currency is more or less valuable when compared to goods, and this is a type of inflation which affects consumer behaviour, particularly if that rise is sustained. Inflation in many countries is measured against some sort of 'basket of goods' that are (in theory) chosen to reflect costs that affect everyday life. I'm not trying to dismiss money supply as a factor, clearly it's a huge factor, particularly over the longer term.