Pop quiz!
Are these statements true or false?
Any time food or gas prices go up, we’re seeing inflation at work.
Inflation is always bad for the economy.
The consumer price index (CPI) and the personal consumption expenditures (PCE) price index are measures of inflation.
Believe it or not, not one of those is a true statement. They’re all false.
Prices change for many reasons, so they aren’t always signs of inflation. And a little inflation is generally expected in a healthy economy. (1)
As for price indexes, those measure general price levels against some base year. Inflation describes how much that price index grows over time. (2)
Those are just a few facts that are important to know about inflation. How many others do you know?
Put yourself to the test with the inflation quiz in this month’s Visual Insights Newsletter.
Inflation can make any of us anxious. We can’t predict it, and that can be a real source of stress. But if we know the facts, it can be much easier to cut through the noise and make smarter financial choices in the face of rising inflation.
So, what do you really know about inflation? What new facts could you learn?
∞