to think this is a misunderstanding of inflation

[cakeorwine]

www.thisismoney.co.uk/money/bills/article-11710035/As-shoppers-face-800-rise-weekly-shop-cost-2023-food-prices-down.html

Talk about prices going down as inflation goes down.
"The price of everything has rocketed since the start of last year, with the consumer price index rate of inflation peaking at 11.1 per cent in October.
It is well above the Bank of England's two per cent target - but the good news is that inflation is expected to fall quickly this year.

The BoE expects the price of energy to start to taper off, and hopes higher interest rates will help to reduce the demand for goods and services in the economy and bring prices down."

"We look at what has been behind the astronomical rises in basic food, and when we might start to see prices returning to normal levels."

Inflation is linked to the rate of rise of the price of goods. So at 10%, it costs 10% more than last year, 2%, it costs 2% more than last year.

I am sure that some prices may come down, and overall food inflation may reduce, but even if it does reduce, prices will not 'return to normal'

There is going to be a lot of disappointment if that's what some people think

DH doesn't think it is inflation, rather a one-off uplift in prices. So prices won't go down, but they won't keep going up at this rate.

Something to do with the price of containers after covid, as well as Ukraine.

inflation by definition means prices going up.

high % inflation means prices rise faster/higher. low % inflation lower/slower price rises.

prices can come down (or go up) due to a change in supply/demand or technological advances.

This is why we need economics lessons in schools.
A lot of people think prices will go down all it means is that prices will stay the same as their high rate now and if they increase it won’t be by 10%

I am looking forward to Sunak explaining that when prices don't come down

"But you said inflation would halve!"

But that is why Sunak has ‘halving inflation’ as one of his promises. The government doesn’t have to do anything for it to happen, and will claim a win. But, as you say, people don’t understand what it will mean in reality, that prices aren’t going to fall, they will just stop rising or rise less.

Some things will come down, some won’t.

A big driver of inflation is energy prices. If the wholesale price of energy drops, the price domestic customers pay will come down, because of the way the price cap works.

Food and other things, maybe won’t come back down to previous levels.

I had so much trouble explaining this to a friend a little while ago that I had to resort to pen and paper and show her the actual numbers. She just couldn't grasp that a reduction in the rate of inflation means that prices rise more slowly.

When prices actually fall, it's deflation. Which is pretty rare.

The price of containers peaked a couple of years ago, but gas dropped right back down - not far off pre COVID prices now :)

I think a good analogy is travelling in a car. The price is the speed. Acceleration makes the car go faster and increase the speed. Less acceleration means the speed still increases but not as much. And brakes. That's deceleration

No in school you need Maths (and other subject) lessons that explain how that subject is relevant to the real world.

For example people say they don't understand interest but most people get taught percentages and compound interest. However people are very rarely given real world examples to use when they are doing their calculations.

Also credit cards don't count due to the "unique" (as in how to rip off consumers) way credit card companies calculate their interest rates.

I'm shocked, I tell you, shocked, that you would think such a thing

It's not even anything to ask about on AIBU, you're completely right. It's quite shocking people don't understand it.

Inflation will halve - it's predicted to be at 4% by December. But that just means annual prices have risen 4% over the previous 12 months, rather than 10%. I honestly think most people understand that OP.

@edwinbear I do t think they do. Liz Truss was interviewed by Beth Rigby and made a song and dance about how the energy bill subsidies were 'deflationary'. She had a degree in PPE and doesn't understand the difference between disinflation (prices rising at a slower rate) and deflation (prices falling). So how is the person in the street supposed to get it?

I think that there is a not insignificant minority who do not understand that falling inflation does not mean falling prices.