Why Do Inflation Rates Sometimes Drop Even When Prices Go Up?

Imagine you go to the store and everything costs a little more, that’s inflation. But sometimes, even though prices are still going up, the average rate of inflation goes down. That happens when some things get much more expensive, but others barely change or even get cheaper. It's like if your friend gets taller every year, but you only grow a little, on average, the group is growing slower.

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Examples

  1. You buy a new phone for $100 this year and $90 last year, that’s not inflation, but gas is up $20. The average rate might still go down.

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