Inflation increases the price of goods and services over time, effectively decreasing the number of goods and services you can buy with a dollar in the future as opposed to a dollar today. If wages remain the same but inflation causes the prices of goods and services to increase over time, it will take a larger percentage of your income to purchase the same good or service in the future. Here’s a chart of the inflation rate from the late 1600s to today. Notice that since the 1950s, the rate of inflation has been positive for nearly every year.
Inflation has impacted everyday life. Take for example milkshakes, you cannot see a picture from a cafe in the 80s or 90s without seeing a brightly colored poster starring a delicious looking milkshake and a little bubble with a price of 5/10 cents! Now days this is insane! We could probably buy a sip of the milkshake with a dime! This is because of inflation. Inflation is a continuous upward movement in the overall prices in society. Over time currency depreciates in value and it takes more of said currency to be worth something. Something most people don’t understand is the concept that things are not crazy more expensive than in the 80s, but the value of our money has became less. Inflation has impacted things I buy but not in the way I thought it had.
