Why the Fuck Is Everything So Expensive?

If inflation falls but remains positive, the average price level is still rising—just more slowly. That does not undo earlier increases. Your own bills can rise or fall differently from the average. [1] [2]

The rate is not the bill

Imagine the same grocery basket costs $100 at the start. Its price rises 8% in the first year, then 3% in the second. Here is the arithmetic—not actual grocery-price data:

The second increase is applied to $108, not the original $100. The total increase is 11.24%, not 11%.

The inflation rate for this example fell from 8% to 3%. The basket did not become cheaper. A slower increase is disinflation; a sustained fall in the overall price level is deflation. Individual prices can fall even while the overall price level rises. [1]

And at zero inflation? The average price level stops increasing over the measured period. It does not magically return to an earlier price level.

The national average is not your household

The Consumer Price Index, or CPI, measures average price change for a basket of goods and services purchased by urban consumers. It is a price-change measure—not a complete measure of everything affecting living standards. [2] [3]

BLS cautions that CPI need not match any particular household. Different spending patterns mean different exposure to changing prices. A household spending heavily on one rising category can face more inflation than the average; another can face less. [2]

Our practical interpretation: a national statistic can be accurate while your own budget still feels brutal. “The average improved” and “I am still struggling” are not contradictory statements.

A price increase needs an explanation, not a villain audition

A price index tells us what changed. Identifying why requires separate evidence.

For a historical example, Adam Shapiro's June 2022 San Francisco Fed analysis attributed elevated U.S. personal consumption expenditures (PCE) inflation to both supply and demand factors, with a remaining portion classified as ambiguous. It used a statistical method based on price and quantity movements. It was not a measurement of today's economy, and PCE is a different index from CPI. [4]

That is a more defensible starting point than claiming every price rose for the same reason. Our editorial approach is to ask which product, which place, which period, and what evidence distinguishes the competing explanations.

What about corporate profits?

They deserve scrutiny. But a claim about a company's pricing is not automatically a finding about economy-wide inflation.

In a May 2024 analysis, Sylvain Leduc, Huiyu Li and Zheng Liu found that estimated markups rose in some industries, including petroleum and motor vehicles, while aggregate markups were broadly flat. They concluded that markup changes were not a main driver of the inflation rise and fall in the period they studied. [5]

This is one dated research result with a particular method—not a verdict on every company, every market or every later period. It does not establish that market concentration caused higher margins.

Affordability is the question that matters

Return to the imaginary grocery basket. If the money available to buy it stayed at $100 while its cost reached $111.24, the shortfall would be $11.24. A lower second-year inflation rate did not close that gap.

If the available budget instead rose to $111.24, it could buy the same basket again. That is a simple illustration of purchasing power, not a claim that wages have caught up for everyone.

Our bottom line: lower positive inflation slows further price increases. Whether life becomes more affordable also depends on income, the particular things you need to buy, and your other obligations. A smaller inflation number is not, on its own, a repaired household budget.