Prices Always Climb

Inflation means the general price level rises over time, so each dollar buys a little less. A movie ticket that cost around four dollars in 1990 runs well over ten today — not because movies got that much better, but because the dollar has lost about half its purchasing power since then.

Moderate inflation of around 2-3% a year is actually healthy. It nudges people to spend and invest, since holding cash means slowly losing value. The trouble starts when inflation accelerates beyond control, and families find their salaries can no longer keep pace with rising prices.