Why can’t prices just stay the same?

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If high inflation hurts just about everyone, why can’t we have no inflation?

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Over the past few years, most of the world has experienced some pretty intense inflation, with prices rising as much as 10 percent in a single year. In 2024, even though inflation rates have fallen to more manageable levels, prices are still way up and are very unlikely to come down. Which, understandably, continues to be a source of major stress for people all over the world. So why can’t prices just stay the same?

As a consumer, steady prices and zero inflation seems like the ideal: You want your purchasing power to stay the same and for your dollar today to buy you exactly the same amount as your dollar tomorrow. But even in times of global economic health and stability, governments and their central banks actively avoid letting inflation get too low. That’s because 0 percent inflation might actually end up doing more harm than good.

In this video, we take a look at the reasons why.

Sources and further reading:
To take a closer look at inflation and interest rates in the US, check out FRED (the Federal Reserve’s economic data repository):

You can read more about inflation targets here:

And you can see more of Rakeen’s work here:

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