What’s inflation and why do we care?
What is inflation?
Have you ever been shopping and noticed that the prices of a range of things you buy have gone up? If the same things in your shopping basket cost $100 last year and now they cost $105, at a very basic level, that’s “inflation.” More precisely, inflation is defined as ongoing increases in the overall level of prices.
https://youtu.be/F35-dJePlrQ
https://youtu.be/F35-dJePlrQ
Get started
- What is inflation?
- Why do prices change?
- Is every price increase inflation?
- How can we tell when inflation is happening?
Get technical
- How do you measure inflation?
- What are price indexes?
- What is “underlying” inflation and how is it measured?
- What are deflation, hyperinflation, and stagflation?
- What is the connection between the Phillips curve and inflation?
Why should you care about inflation?
What would you do if the money in your wallet or bank account could buy less and less every year? Would you spend more time thinking about how to get the most out of your money while you could? Would you change what you bought or how much? Would you keep money in your savings account? Thinking more broadly, inflation affects everyone in the economy: workers, businesses, people on fixed incomes, lenders, and borrowers.
https://youtu.be/Pcm5aLlXIlE
https://youtu.be/Pcm5aLlXIlE
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- How does inflation affect the economy?
- How can inflation be harmful?
Get technical
- What are the effects of inflation?
- What problems do predictable and unpredictable inflation cause?
Why does the Fed care about inflation?
Some countries have experienced such high inflation rates that their money became worthless. Imagine going to the store with boxes full of money and not being able to buy anything with it because prices have gotten so high! At such high inflation rates, the economy tends to break down. One of the Federal Reserve’s main responsibilities is to keep prices stable.
https://youtu.be/DYtBf_YjELw
https://youtu.be/DYtBf_YjELw
Get started
- Why does the Federal Reserve care about keeping prices stable?
- How does the Federal Reserve try to control inflation?
Get technical
- What is the Federal Reserve’s “dual mandate”?
- Does the Federal Reserve have a specific target for inflation?
- Why doesn’t the Federal Reserve set an inflation target of 0 percent?
- Does the Fed focus on underlying inflation because it doesn’t care about certain price changes?
What are the different types of 'flation?
Have you been hearing different inflation related terms mentioned on social media or in the news and want to learn more? We've created a new stop motion video series that explains different types of 'flation with everyday items, like potato chips. Watch the videos below to find out how! For more of our social content, follow us on Twitter, Facebook, LinkedIn, and Instagram to stay up to date with our latest inflation work.
https://www.youtube.com/shorts/pMBT3ioDJgw
https://www.youtube.com/shorts/pMBT3ioDJgw
Disinflation, explained!
https://www.youtube.com/embed/iVb9vrlKG0M
https://www.youtube.com/embed/iVb9vrlKG0M
Shrinkflation, explained!
https://www.youtube.com/embed/tzgmQhcgTF4
https://www.youtube.com/embed/tzgmQhcgTF4
Stagflation, explained!
https://www.youtube.com/embed/kuMvagqz8zQ
https://www.youtube.com/embed/kuMvagqz8zQ
Hyperinflation, explained!
https://www.youtube.com/embed/H98D2Ew10Tk
https://www.youtube.com/embed/H98D2Ew10Tk
Deflation, explained!
Featured news
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