Why has inflation been so high globally in recent years?

Imagine you have a huge pile of allowance money but only one small ice cream cone to buy it. Recently, every time you try to get that ice cream, the price tag keeps going up! That is what inflation feels like: when things cost more money than they used to because there isn't enough stuff for everyone who wants to buy it.

Think of stores and factories like a busy playground during recess. Two big things happened that squeezed the toys (goods) from getting out. First, people spent a lot more money because governments gave them stimulus checks when they were stuck at home. It was like everyone suddenly got rich enough to run around and buy shiny new bikes. But here is the catch: factories couldn’t keep up. They made bikes as fast as they could, but not fast enough for all the runners. When more money chases fewer toys, the price of each toy goes up.

Second, it became very expensive and hard to move those toys around. Ships got stuck in canals like giant plastic blocks in a drain, and truck drivers were scarce, like missing puzzle pieces. This is called supply chain disruption. Because shipping cost more, shops had to charge you more for the same shirt or box of cereal. It wasn’t magic; it was just real people working harder and paying more to get things from the factory to your house.

Now, we are trying to balance the playground. People are still spending money, but factories are finally making more toys again. Also, gas prices have settled down a bit, so it costs less to drive those trucks. Central banks act like referees who raise the "cost of borrowing." They make it a little pricier to take out loans for big things like houses or cars. This slows people down slightly, giving everyone time to catch their breath and letting prices stop growing so fast. It is a gentle brake on an engine that was revving too high.