Forum | Inflation question... by BanksterDebtSlave

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Inflation question... 08:28 - May 2 with 626 views

Why is it that once prices go up in times of inflation they never go back down again when the background reasons have stabilised?

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Inflation question... on 08:48 - May 2 with 576 views

BloomBlue

Because when inflation/ cost of living goes up wages (eventually) go up and most people are unhappy if their wages are decreased when inflation goes down. Therefore to pay for that wage increase prices remain at that same higher level(ish)
It's more complex with commodities like petrol but remember in the 1st lockdown it dropped down to £1 a litre so it does drop down.

Inflation question... on 08:49 - May 2 with 568 views

chicoazul

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Inflation question... on 08:56 - May 2 with 543 views

BanksterDebtSlave

Inflation question... on 08:48 - May 2 by BloomBlue
Because when inflation/ cost of living goes up wages (eventually) go up and most people are unhappy if their wages are decreased when inflation goes down. Therefore to pay for that wage increase prices remain at that same higher level(ish) It's more complex with commodities like petrol but remember in the 1st lockdown it dropped down to £1 a litre so it does drop down.

The BofE have explicitly expressed that wages should not increase in line with inflation. Do you really think they will especially if we are heading into an era of stagflation? Also why would wages decrease when inflation goes down but prices are still increasing?
My understanding is that deflation is regarded as the greatest economic evil and to be avoided at all costs. (Q.E.)

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Inflation question... on 08:59 - May 2 with 531 views

GeoffSentence

It can happen, that is deflation. Usually it is a bad thing.

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Inflation question... on 09:06 - May 2 with 512 views

BanksterDebtSlave

Inflation question... on 08:59 - May 2 by GeoffSentence
It can happen, that is deflation. Usually it is a bad thing.

Although that is from the perspective that ever increasing GDP on a finite planet is a good thing.
https://www.investopedia.com/articles/markets/111715/can-deflation-be-good.asp#:

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