Why Is Everything So Expensive? Inflation Explained

Six dollars for a coffee? Are you serious?

Ha! Welcome to the real world, kiddo.

Ugh, it was four fifty last year, Grandpa!

Well, prices don't stay the same forever.

And look at this bread. It's gone up again!

That's inflation. Prices slowly rise over time.

Oh no. So my money just buys less?

Exactly. Ten dollars gets you a little less every year.

When I was your age, a loaf of bread was thirty-five cents.

Thirty-five cents? No way!

Ha, but I earned less than three dollars an hour!

Oh... so pay went up too?

Usually, yes. Just not always as fast as prices.

But why does it happen? Who decides?

Nobody really decides. Think of it like this.

When everyone wants something that's hard to get, sellers ask for more.

Oh, like concert tickets for a famous band!

Ha, exactly! And when costs go up, prices follow.

If energy gets more expensive, the bakery pays more too.

Gas for the ovens, fuel for the trucks... it all adds up.

Ugh, and then they pass it on to us!

Can't anyone stop it?

Central banks try. They raise interest rates.

Borrowing costs more, so people spend less and prices slow down.

Hmm, so a little inflation is normal?

Yes. Many central banks aim for about two percent a year.

So, my advice? Compare prices before you buy.

And keep your savings somewhere that pays interest.

Okay, okay. And maybe make my coffee at home?

Now you're thinking like your grandpa!