Why prices keep going up

The lesson in full

Your favourite drink costs more than it did a few years ago. That slow, general rise in prices is inflation. It means the money in your pocket buys a little less.
Statisticians price a basket of everyday things, such as food, rent, transport and school, and compare it with a year earlier. If it cost 100 and now costs 105, inflation is 5%.
Energy often lights the fuse. After fuel and food prices soared, US inflation hit 9.1% in June 2022, the highest in about 40 years.
Argentina's yearly inflation passed 200% at the end of 2023. When prices spin out of control, it's called hyperinflation, as in Zimbabwe in 2008 or Venezuela from about 2017.
Central banks want low, steady inflation, not zero. The Fed, the ECB and the Bank of England aim for 2% a year, Bank Indonesia for 2.5%, Banxico for 3% and India's RBI for 4%.
Common mistake
Myth: when inflation falls, prices fall. Reality: falling inflation means prices are still rising, just more slowly. Prices actually falling is called deflation.
Key takeaway
Inflation is the slow rise in prices that shrinks what your money buys. Low and steady is the goal.

Inflation means... Prices rise over timeInflation is a general rise in prices across the economy, usually measured over a year.
If inflation is high, your US$100 buys... Less than beforePrices went up but your note didn't, so the same US$100 covers fewer things.
Most big central banks, like the Fed and the ECB, aim for inflation of about... 2% a yearAbout 2% is low enough not to hurt people, while keeping a safe distance from falling prices.
Inflation drops from 8% to 3%. Prices are now... Still rising, but more slowly3% inflation still means prices are 3% higher than a year ago. They just climb more slowly.