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Thursday, May 30, 2024

What is Inflation?

A general increase in prices and fall in the purchasing value of money

How do you explain inflation to your kids? Why does the McDonalds Big Mac Combo Meal cost so much more now than it did four years ago?

2020 Big Mac Combo Meal                   $7.89
2024 Big Mac Combo Meal                 $12.59

That’s an increase of 60%!

Inflation is like a game where the prices of things we buy go up over time. Imagine if your favorite toy suddenly costs more than it used to. That’s inflation! It means our money can’t buy as much as it did before. Just like blowing up a balloon makes it bigger, inflation makes prices bigger. Sometimes it’s because there’s more demand for things, like everyone wants the same toy. Other times, it’s because it costs more to make stuff, like if the materials get pricier. Inflation affects everything from the price of candy to the cost of a new bike.

When prices rise too quickly, it can be tough for people to afford what they need. So, keeping an eye on inflation helps us make sure everyone can still buy what they want.