Why Do Inflation Rates Keep Fluctuating?

Imagine you and your friends are playing a game where everyone has a piggy bank. Every time the bank adds more coins to each of your piggy banks, it feels like things are getting more expensive. But sometimes the bank stops adding coins for a while, so prices don’t go up as fast. That’s kind of how inflation rates work. When money is added quickly, prices rise, like when the bank gives you a lot of new coins all at once. But if it slows down or stops, inflation goes down.

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Examples

  1. When the piggy bank adds a lot of new coins quickly, prices go up fast.
  2. If the piggy bank only gives you one coin every day for weeks, prices stay low.
  3. Sometimes the bank forgets to add coins at all, and prices even go down.

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