Inflation

Well, the amusing thing about the language used around inflation for the past few years is the phrase "inflation is down". It's, of course, formally true and even accurate. The problem is that there appear to be lots of people who don't understand what it means.
Inflation refers to the increase in price of an item or service over time. Positive inflation means prices are going up -- and, indeed, they are. The rate at which they're going up has decreased, so, yes "inflation is down" -- but that only means prices are going up more slowly than they were. BUT... They're still going up.
... and it's tempting to think, "heck, 3% per year? That's nothin'!" Which is sort of true -- from one year to the next. But what about 3% per year, year after year? Say -- after 5 years, or 10 years, or 50 years. Ruh-roh.
Let's do a little math! An annual rate of inflation of 3% means that "prices" will be increased (on the average, however that average is determined) by 3% twelve months from "now" (whenever "now" is). If that 3% per year condition is maintained, the outcome will be exponential growth.
Thus, at 3% APR, a theoretical item with a price of $100 today might be expected to cost $103 on 28 Nov 2024. How much on 28 Nov 2025? $106.09 (which is $103 plus 1.03 times $103), etc. This is what an APR of 3% looks like over a few decades, and you can see it's not just going up, but it is going up ever more quickly as the years go by. The relationship between the points isn't a straight line; it's a line that curves upward ("concave upwards" in the language of folks who create or who just stare at graphs for a living).

In mathematical/financial language this kind of assessment's known as "net value of a present sum". It works in our favor when we invest in a CD or bank account (or bond) that pays interest compounded regularly (e.g., annually) but it works against us when the "driver" is inflation and the "sum" is how much something costs! The equation that governs this is Vn = Vo (1 + i )^n, where: Vn is future value (after "n" periods of time), Vo is present value, i is (in this case) the inflation rate, and n is the number of periods (years, in this case). It's that exponential term ("^n") that does the damage!
When the TV or whatever says "inflation is down" it means the value of "i" is lower in that equation -- but it still acts exponentially to raise prices over time.
Here's what that calculation looks like for our $100 in 2023 item at a 3% annual rate of inflation. Not a pretty sight, as the genie in Disney's Aladdin might have put it.

odcics2 wrote: »

:Look at an old Three Stooges short.
Breakfast for 10 cents!
I’m sure folks complained it used to be a nickel.

Not that I can document it via google ATM (maybe I should try BingAI or whatever?!), but there was, reputedly, a famous exchange between Harpo Marx and (IIRC) S.J. Perelman. They were in a very fancy restaurant and Harpo was aghast at (or is it by?) the prices. "What can you get here for a quarter?!" exclaimed Harpo. "A dime" deadpanned his tablemate (Perelman, or whoever it was).