Is inflation uniform across the hierarchy of available goods and services?
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Ltryptophan (
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September 18th, 2022
from iPhone
Say you buy a gallon of milk in 1977, and it’s $0.99. Then in 2022 you buy a gallon of the same milk and the price is $3.99. Is this inflation ratio going to be true regardless of what is purchased, or does price get balanced for some items (like milk) despite inflationary pressures.
What would this(these) other pressures be called? Demand?
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3 Answers
No, of course it isn’t.
Inflation is an economics concept and/or a measurement taken from examples of certain prices picked by economists to try to get some big-picture approximation of what is happening over the whole economy. People set prices based on whatever circumstances and thinking they have in each case.
The only time that “inflation” actually causes a price increase directly, is when an economist picks some prices, calculates a figure for inflation, and then someone responsible for setting prices on something, reads what that economist wrote, and chooses to use that to set their price.
It might apply, for example, for someone trying to figure out what raise or salary they should ask for, to keep up with theoretical inflation.
But other than that, inflation itself isn’t a first-order thing that exists and directly causes effects. It’s an abstract approximate measure after the fact.
No, it varies immensely based on timing, commodity, service, and a host of other factors.
Look at the price of gas.
A year ago, we were paying $2.29/gal.
Eight weeks ago, I bought gas for abour $4.09/gal.
Yesterday at the BP nearby, it was $2.84.
So where do you measure from? Compared to 12 months ago, much higher. Compared to 2 months ago – much lower.
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